Due to the shaky stock market, Bitcoin is also fluctuating again, with Ethereum also falling below USD 3,000 again. Bitcoin has also fallen back to the $40,000s after a large drop in the stock market wiped out the bulls’ recent surge. Especially during the last trading hours on Wall Street, Bitcoin could not hold up.
US markets reacted strongly to stronger US Treasury yields, causing the Nasdaq 100 to fall 2% taking it all with it. BTC fell by USD 3,000 within a few hours and was able to recover somewhat from a low of USD 39,800.
Another trigger was the US Federal Reserve’s balance sheet reduction. The fight against huge inflation, which also put pressure on equities and risky assets, has long been priced in but has not yet been visible in the data.
It looks like the Fed’s balance sheet expansion stopped short of hitting the $9 trillion mark. Total Fed assets have shrunk by $9.6 billion to $8,955.9 billion. Total assets now equal 37.3% of US GDP versus 83% for the ECB and 137% for the BoJ. The European Central Bank (ECB) has so far shown no signs of reducing its balance sheet, which itself is close to $10 trillion.
Fed Chair Jerome Powell’s comments have added to the uncertainty as they point to a rate hike in May. Crypto traders are cautious as a result, with several noting that the weekly surge to just under $43,000 was light-hearted, thus looking dangerous to many.
In a six-month period, bitcoin bulls failed to push bitcoin out of its current range. Ethereum and other altcoins are also being dragged down by the weak BTC. The top ten cryptocurrencies are struggling with losses of around 4%.