deepened Bitcoin It lost ground over the weekend, as it fell below the $42,000 level following dropping more than 11% over the last 7 days.
The largest cryptocurrency by market capitalization approached the $40,000 level for the first time since late September, bringing its losses since its peak just 3 months ago to around 42%.
Meanwhile, cryptocurrency market capitalization has lost regarding $700 billion in the last 7 days, with Ether dropping more than 17.4%, and major cryptocurrencies not being spared from the declines.
The volatility comes amid signs that the Federal Reserve is preparing to combat persistent inflation by withdrawing stimulus. The minutes of the central bank’s December meeting, which was published last Wednesday, pointed to the opportunity to raise interest rates earlier and faster than expected, as economists expect liquidity levels to be affected, dulling the luster of risky, high-growth assets.
For his part, Matt Malley, chief market strategist for Miller Tabak + Co, said: “If the Fed’s policy becomes more hawkish, speculative assets, including cryptocurrencies, will become more risky.”
Bloomberg Intelligence analyst Mike McGlone sees $40,000 as an important technical support level for Bitcoin, and cryptocurrencies are a good indicator of the current decline in risk appetite. But he expects Bitcoin to eventually be at the fore as the world becomes increasingly digital and cryptocurrencies become the standard security, according to what Al Arabiya.net has seen.
This comes at a time when the Corona pandemic helped Bitcoin to spread further, as institutional and individual investors became involved in the cryptocurrency market and its related projects.
Since the beginning of the year, the Bloomberg Crypto Galaxy Index of cryptocurrency has lost nearly 10%.
