The second-largest currency, Ether, is not too dissimilar to Bitcoin in that it, too, dropped as much as 9% to its lowest level since 30 September 2021. According to CoinGecko, both tokens, alongside others including Solana, Cardano, XRP and Binance Coin, are all down over 10% in the last week.
The dip came minutes after Federal Reserve's December meeting was published on 5 January 2022. It gave the idea of unexpected rake hikes alongside a potential balance-sheet rundown.
Fundstrat strategists said: “The Fed’s intention to reduce the balance sheet in Q1 2022 is the primary cause of this sell-off. Unfortunately, no immediate support looks likely ahead of September 2021 lows at $39,573, with breaks of that leading down to last summer’s May-July bottom.”
Last year, Bitcoin grew around 60% which outperformed other asset classes, but in recent weeks the figures show it has struggled.
Ben Caselin, Crypto Exchange AAX Head of Research and Strategy, said: “As the crypto market matures, we can see major crypto assets such as Bitcoin and Ethereum increasingly move in tandem with traditional markets including Treasury bonds.”
Antoni Trenchev, Co-founder of Crypto lender, Nexo, explained that a breakdown of Bitcoin's price below $41,000 “could get ugly, with the mid-to-low thirties a possible destination,” adding that between May to July last year, Bitcoin endured a two-month period of consolidation.
“A repeat of history can’t be ruled out as Fed tightening remains the popular narrative,” he concluded.
