Bitcoin falls to its lowest level in two months due to inflation concerns.
Bitcoin and other cryptocurrencies came under pressure on Thursday as investors vented their worries about the US economy.
Bitcoin's price dropped by roughly 4% to $27,901.60, according to Coin Metrics. After the minutes of the July 2023 federal policy meeting were made public on Wednesday, the decline started.
According to the minutes, the Fed sees "uncertain earning potential" for inflation, which might result in additional interest rate increases.
The benchmark interest rate was hiked by the Federal Reserve at that meeting to its highest level in more than 22 years.
Markets anticipate that the central bank won't change interest rates any further this year.
Given that Bitcoin's correlation with stocks was at a two-year low, but rose to an all-time high in 2022, the stock market reacted by falling for the second straight day on Wednesday, and the yield on the 10-year US Treasury note reached a closing high. The initiative was started in reaction to the Federal Reserve Bank's plan to increase interest rates to curb inflation.
Chief Investment Officer at Defiance ETFs Silvia Jablonski stated: "While inflation in and of itself may be a pretext for growth in cryptocurrency assets, inflation is accompanied by other aspects, such as: a period of risk aversion from investors who fear recession, and avoidance of riskier assets." such as Bitcoin.
According to Kaiko, this week saw multi-year lows for the 90-day volatility of bitcoin and ether of 35% and 37%, respectively.
Many of the most valuable cryptocurrencies by market capitalization were there, including ether, polygon, and BNB from the cryptocurrency exchange Binance, XRP from Ripple and Solana, and Polygon, which plunged more than 3 percent on Thursday.
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