Cryptocurrency Couples with US Tech Stocks... Bitcoin Plummets 11%

[Asia Economy Reporter Kim Hyunjung] Cryptocurrencies have plunged amid concerns over economic slowdown due to the U.S. Federal Reserve's (Fed) tightening policy, showing a coupling phenomenon with the stock market. The decline marked the largest drop since January this year.

On the 5th (local time), Bloomberg reported that Bitcoin fell sharply by 11%, hitting $35,611 during intraday trading. This is the lowest level since January 21 ($34,849) this year.

Ethereum's decline widened to 8.7%. Avalanche and Solana, which had shown significant gains after the U.S. central bank raised interest rates last week, fell by 15% and 11%, respectively.

Jason Lau, Chief Operating Officer (COO) of OKCoin, explained, "Investors are anxious that the Fed will continue to raise interest rates even after a 50 basis point increase," adding, "The possibility of further rate hikes makes the trajectory of the global economy uncertain." The Fed unanimously decided the previous day to raise the benchmark interest rate by 50 basis points and announced plans to reduce holdings of Treasury bonds, government agency bonds, and mortgage-backed securities (MBS) starting next month.

Bitcoin, like the U.S. stock market, briefly rose nearly 6% and surpassed $40,000 following optimistic sentiment in the market after Fed Chair Jerome Powell said that a 75 basis point 'giant step' hike was "not actively being considered." However, as the U.S. New York stock market declined, mainly in tech stocks, cryptocurrencies also gave back the previous day's gains and plunged. On the same day, tech stocks led the losses in the Nasdaq market, with Tesla (-8.3%), Apple (-5.5%), Amazon.com (-7.5%), Microsoft (-4.3%), Meta (-6.7%), and Netflix (-7.6%) all falling sharply.

Josh Olszewicz, Head of Digital Research at asset management firm Valkyrie Investments, explained, "Bitcoin is increasingly beginning to correlate with traditional U.S. market indices (stock market)."

Funds are also flowing out. According to digital asset management company CoinShares, a total of $339 million has been withdrawn from cryptocurrencies over the past four weeks, with most of it coming from Bitcoin.

This content was produced with the assistance of AI translation services.