Bitcoin drops 10% overnight amid Fed taper worries
06:26, 8 June 2021
The price of bitcoin (BTC) took a plunge overnight and stopped just above $32,500 on Tuesday morning 06:00 UTC after trading as high as $36,700 on Monday afternoon. Over the last 24 hours, the world’s leading digital currency lost over 9% of its value.
Ethereum (ETH) also plunged by about 10% to under $2,500 after briefly going above $2,800 on Monday. Most of the top cryptocurrencies recorded double-digit drops over the last 24 hours.
The fall comes after about a week of relative silence on the crypto market during which most of the leading assets traded in a narrow price range.
Fed taper prospects push investors out
Recent comments by officials of the US Federal Reserve (Fed) suggest that the world’s biggest central bank could soon decide to reduce its asset purchases, according to CNBC.
The Fed’s asset purchases, which currently stand at about $120bn a month, have been supplying the markets with liquidity, pushing stock prices up and prompting investors to look for other placements to hedge against rising inflation prospects.
Some investors, who parked their money into the cryptocurrency market, may now decide to pull out, which could explain the new drop in bitcoin’s price, according to CoinDesk.com.
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Bitcoin price almost halved in two months
The cryptocurrency market started the year in full swing and the prices of all the leading cryptocurrencies went up rapidly. Bitcoin climbed from about $29,000 at the end of December 2020 to almost $65,000 in mid-April.
However, the rapid increase was followed by a turbulent period in which the price of bitcoin almost halved amid a series of bad news for the crypto market – and the prospect of it reaching $100,000 by the end of this year faded away. Bitcoin is now trading about 10% above the level recorded at the beginning of this year.
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