The cryptocurrency data tracking platform, Coinmarketcap, revealed that Bitcoin (BTC) plummeted to a three-week low on Wednesday, reaching $22,030. The gravitating reports allegedly followed Federal Reserve Chairman Jerome Powell’s hawkish testimony to Congress on Tuesday.
The leading cryptocurrency by market value faced a sell-off as traders priced in a higher “terminal rate” amid concerns that the central bank could soon raise interest rates. Ethereum (ETH), the second-largest cryptocurrency, also suffered, nearly testing Tuesday’s low of $1,554.
Powell’s comments indicated that the US economy was recovering quickly from the pandemic, and the central bank could soon hike interest rates to prevent overheating. The Fed Chairman also acknowledged that the inflation rate could remain high for some time before returning to the bank’s long-term target of 2%.
The prospect of tighter monetary policy caused a sharp sell-off in the cryptocurrency market, which has seen a surge in demand as a hedge against inflation and a store of value amid economic uncertainty. However, the latest drop in prices has put a question mark on the future of digital assets as a reliable investment option.
BTC’s current valuation may not be sustainable in light of the rising rates and yields undermining the appeal of risk assets, warns QCP Capital, a Singapore-based trading firm. The company previously noted that BTC could see the last leg of the bear market, with prices potentially dropping to, or even below, the November low of $15,480.
Amid the increased uncertainties and Jerome Powell`s testimonies, BTC’s price analysis from Coinmarketcap shows that the BTC/USD pair currently trades at $22,028 with a 24-hour trading volume of $24,686,018,183.
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Source: Cryptocurrency - investing.com
