Bitcoin hits lowest since September in drop of 40% from record

business-standard.com:

Bitcoin continued a weeks-long drop on Friday, falling below $42,000 to levels not seen since September.

The largest cryptocurrency declined as much as 4.9% to $41,008, marking a tumble of about 40% from its record near $69,000 reached Nov. 10. Ether, the second-largest, dropped as much as 9% to its lowest level since Sept. 30. Both of those tokens, as well as others including Binance Coin, Solana, Cardano and XRP are down more than 10% in the past seven days, according to CoinGecko.

The retreat comes after minutes from the Federal Reserve’s December meeting, published Wednesday, flagged the chance of earlier- and faster-than-expected rate hikes as well as potential balance-sheet rundown.

“The Fed’s intention to reduce the balance sheet in Q1 2022 is the primary cause of this sell-off,” Fundstrat strategists said in a note Thursday. “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.”

Bitcoin gained about 60% last year, outperforming other asset classes amid a narrative that included institutional adoption, inflation protection and investment diversification. It’s struggled in recent weeks, though, amid a volatile period for financial markets. Spiking inflation is leading central banks to tighten monetary policy, threatening to reduce the liquidity tailwind that lifted a wide range of assets.

“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,” said Ben Caselin, head of research and strategy at crypto exchange AAX.

Also factoring into the declines, according to Todd Morakis, co-founder of