As optimism in financial markets subsided after Wednesday's fed meeting, bitcoin recorded its biggest decline in nearly a month. On Thursday, the largest digital currency fell 8% to US $36639, the largest intraday decline since April 11. Bitcoin rose 5.3% on Wednesday.
Ethereum fell 7.2% on Thursday. Avalanche and Solana fell 11% and 7.3% respectively in some of the digital currencies that rose the most after the Fed raised interest rates on Wednesday
Josh Lim, director of derivatives at Genesis global trading, a brokerage firm in New York, said that the market still needs to digest the impact of tightening monetary policy on all risky assets. The correlation between cryptocurrency and US stock market has increased, so it may also be impacted.
The Federal Reserve announced on Wednesday that it would raise its benchmark interest rate by 0.5 percentage points and reduce its holdings of US Treasury bonds and mortgage-backed securities from June. Risk assets soared after Fed chairman Jerome Powell said the FOMC did not actively consider raising interest rates by 75 basis points.
However, in the context of rising interest rates, bitcoin has failed to substantially break through the high point at the beginning of this year. Over the past few months, bitcoin has roughly maintained a narrow range of fluctuations.
"Despite the weakening of Powell's hawkish degree, bitcoin technology is still very poor and failed to recover the $40000 mark, so it fell back," said teong Heng, CEO of satori research, a Hong Kong cryptocurrency investment company. "Cryptocurrency also fell after the US stock market reversed yesterday's rise."
At a time when the trend is sluggish, funds also flow out of the industry. According to the data tracked by coinshares, investors withdrew about $120 million from cryptocurrency products last week, and the total outflow in the past four weeks reached $339 million.