Bitcoin price drops a leg lower and stocks slump after St. Lous Federal Reserve President James Bullard signals that interest rates could rise by the end of this year.
Bitcoin (BTC) and the wider financial markets faced a new wave of selling on June 18 following comments from James Bullard, the president of the United States Federal Reserve Bank of St. Louis, indicating that he expects the first interest rate increase to happen in late 2022.
Bullard's comments were even more hawkish than Wednesday’s comments from Fed Chair Jerome Powell, who indicated that the rate hikes would come in 2023. Powell's comments triggered a sell-off across financial markets as the U.S. dollar gained strength.
The uniform sell-off across a variety of assets including stocks, gold and cryptocurrencies has further eaten away at the narrative that Bitcoin is an uncorrelated asset, as data shows that BTC's correlation with both gold and stocks has continued to increase throughout 2021.
Friday's close in traditional markets marked one of the worst weeks for the Dow since October after the index saw five straight sessions of losses for a total decline of 3% this week.
The S&P 500 and NASDAQ were also hard hit on Friday, closing the day down 1.31% and 0.92% respectively, while the 10-year treasury note fell by 4.04% in response to the strengthening dollar.
As for the cause behind the recent hawkish stance from the Fed, Bullard pointed to a higher than expected level of inflation as the economy reopens following the Covid-19 lockdowns.
“We’re expecting a good year, a good reopening. But this is a bigger year than we were expecting, more inflation than we were expecting. I think it’s natural that we’ve tilted a little bit more hawkish here to contain inflationary pressures.”
Bullard suggested that in the future, inflation is "running at 3% this year and 2.5% in 2022 before drifting back down to the Fed’s 2% target.”
Altcoins saw their prices decline alongside Bitcoin on Friday as traders once again fled to the safety of stablecoins as market volatility picked up.
Ether (ETH) saw its price slide more than 13% to reach a low at $2,137 and Amp (AMP) fell 33% from its all-time high of $0.1211 that was established on June 16.
Of the top 200 coins, the two best performances of the day were ZKSwap (ZKS) with a 14% gain Gnosis (GNO) which rallied by 7.4%.
The overall cryptocurrency market cap now stands at $1.486 trillion and Bitcoin’s dominance rate is 44.8%.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Bitcoin bears in current cycle may ‘flush out’ weaklings as per this exec
The founding and managing partner of Guggenheim Partners, Scott Minerd, shared his thoughts about the cryptocurrency market at large in a recent interview with Bloomberg. He addressed the matter of how traders could profit from the large price fluctuations underway in the cryptocurrency market. However, he put out a word of caution. Scott stated that […]
With Upcoming Interest Rate Hike from Fed, Is BTC's Current Rally Short-Lived?
Bitcoin has regained momentum and reclaimed the $23K level, but this begs the question if this uptick is short-lived, given that the upcoming interest rate hike from the Fed. (Read More)
Gary Gensler clarifies plans for crypto regulations, but will the SEC follow through?
Russia has reportedly implemented a new law that bans crypto payments in the country. This move may rip off the proverbial bandage on the crypto market which has been trying to recover after a major selloff this year. SEC’s Gary Gensler’s latest statements may however water down the fresh concerns over unfavorable regulatory pressure and […]
Bitcoin Dipped below 100-hour MA, Triggering Further Downswing, Analyst Suggests
Bitcoin dipped below the 100-hour MA, triggering a continuous downswing. Analysts suggest the leading crypto might further drop to a level between $19.3K and $18.6K. (Read More)
Is Bitcoin Gearing Up for Consolidation Before Triggering a New Bullish Cycle?
With Bitcoin (BTC) hovering around the 200-week moving average (MA), some analysts believe that the top cryptocurrency might be laying grounds for a ranging market that would, later on, prompt a bullish cycle. (Read More)
Bitcoin Touches $21K amid Fed's Interest Rate Hike Hitting a 28-Year High
Bitcoin (BTC) was up by 2.90% in the last 24 hours to hit $21,782 during intraday trading, with news about the Federal Reserve’s interest rate increase of 75 basis points (bps) making airwaves. (Read More)
Is Fed’s Interest Rate Hike the Biggest Impediment to Bitcoin’s Bullish Outlook?
With speculations high that the Federal Reserve (Fed) will increase the interest rate by 75 basis points (bps) on June 15 to tame inflation, this might dent Bitcoin’s bullish outlook as the leading cryptocurrency continues to trade at an 18-month low. (Read More)
Bitcoin Enters the Deepest Phase of the Current Bear Cycle as Price Slips to an 18-Month Low
After briefly slipping to the $21K zone, Bitcoin (BTC) continues to trade at levels last seen in December 2020. Glassnode believes BTC is entering the deepest part of the present bear cycle, given that even long-term holders are experiencing losses. (Read More)
Bitcoin Needs to Reclaim $36K to Invalidate the Bearish Thesis, BTC's Correlation with S & P 500 Hits ATH
Market analyst Ali Martinez believes a bearish picture is being painted in the BTC market because it has broken the historical trendline, but it can be invalidated if $36K is reclaimed. (Read More)