Bitcoin extended its slide into the weekend as the most speculative of assets continues to be hit the hardest while the excesses of the last few years get wrung from global markets.

The largest cryptocurrency by market value approached $40,000 for the first time since late September, bringing its losses since a peak just three months ago to about 42%. Ether, the second-largest digital asset, also declined, while popular DeFi tokens such as Uniswap and Aave remained under pressure into the weekend.

The choppiness comes amid signs that the Federal Reserve is getting ready to combat persistent inflation through the withdrawal of stimulus. Minutes from the central bank’s December meeting, published Wednesday, flagged the chance of earlier and faster-than-expected rate hikes as well as a potential balance-sheet rundown. Those actions would remove liquidity from the system, which could dull the shine of high-growth and speculative assets.

“If the Fed is going to be more aggressive, risk assets, including cryptos, are more vulnerable," said Matt Maley, chief market strategist for Miller Tabak + Co.

Bloomberg Intelligence’s Mike McGlone said $40,000 is an important technical support level for the digital token. Cryptocurrencies are a good barometer for the current reduction in risk appetite. But he projects that Bitcoin will eventually come out ahead as the world increasingly goes digital and the coin becomes the benchmark collateral.

The Covid-19 pandemic helped Bitcoin break further into the mainstream as institutions and retail investors got involved with the crypto market and its ancillary projects. Now that the Fed has turned more hawkish, riskier assets like stocks and digital assets have suffered. The Bloomberg Galaxy