Bitcoin fell for a straight fourth day as expectations for the biggest rise in US interest rates in three decades diminish demand for riskier assets.
The correlation coefficient between the Bitcoin and US equities have climbed in the past 90 days as investors grow more risk adverse with the Federal Reserve pulling back on the pandemic-era stimulus that is credited for helping to fuel the rise of crypto. Alternative coins such as Ether, XRP and Litecoin fell more than the original digital asset.
Bitcoin fell as low as $42,760 in early Asia trading, dropping below $43,000 for the first time since March 24. It is down about 7.4 per cent this year. The declines in digital assets mirrored a broad equities sell-off, with Japan’s Nikkei Index down 1.8 per cent.
Altcoins have dipped further given their smaller market value and lower trading volume, which usually results in wider price swings. Cardano has fallen 9.1 per cent over the past five days, while Solana is down 9.4 per cent.
Bitcoin briefly surpassed $48,000 in late March to erase losses since the end of the year, spurring optimism that it would break out of the tight trading range in which it had been stuck. Ether had been outperforming Bitcoin during the rebound because of its upcoming technical upgrade scheduled later this year.
Earlier, billionaire crypto investor Michael Novogratz said that once the Fed took a pause, Bitcoin could start to take off again.
Mr Novogratz, who leads Galaxy Digital Holdings, predicted the central bank would remain “very hawkish for a while” because of high inflation, and would probably raise interest rates by 50 basis points soon.
But as the economy slows down and the Fed steps back, “Bitcoin goes to the moon,” he said, repeating a popular crypto catchphrase.