The flagship crypto dropped about $4K in just a few hours after notes from the Fed’s December FOMC session re-confirmed plans to reduce the balance sheet.
Bitcoin fell below $42.5K in the early hours of Thursday as the dollar rallied and encouraging economic news from the United States loosened investors’ grasp on riskier financial assets.
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The Federal Reserve signaled that a rate hike could happen in March rather than the customary timetable, which caused an intraday sell-off.
207,527 traders liquidated a total of more than $800 million in trading positions during the day. On Bitmex, $10 million in XBTUSD was liquidated.
While some investors are flocking to safe-haven currencies, others are flocking to alternative cryptocurrencies (altcoins) such as Solana, XRP, and Polkadot, all of which are down more than 10%.
Despite the attention on altcoins, purchasing pressures in Bitcoin and Ethereum have decreased for the time being. If BTC fails to break back above $45K, the market may enter a prolonged bear phase, with a retracement to the low $30K region.
The market capitalization of cryptocurrencies is now $2.04 trillion, down 8.53 percent from yesterday. However, activity is increasing, with the overall crypto market volume for the day reaching $122 billion, up 18.25%.
Bitcoin currently has a market share of 39.74 percent, up 0.39 percent from yesterday. On Wednesday, BTC’s dominance ratio — a measure of BTC’s market capitalization about another crypto – continued to fall, reaching 39%. This is the lowest ratio since April 2018, when cryptocurrency prices were in freefall.