Crypto Sale Fueled By Fed Concerns Clears Nearly $ 900 Million In Bets

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Bitcoin traders suffered their worst day in a month after traditional market turmoil spilled over into digital asset trading and turned nearly $ 900 million worth of bets into the water.

The liquidations that have hit leveraged traders come after the US Federal Reserve signaled it may tighten monetary policy sooner than many investors expected to fight rising inflation. The prospect of rising interest rates has caused stock market prices to fall and government bond yields to rise.

The change in position also triggered a massive sell off in bitcoin, which has lost 10% of its value in the past 24 hours to trade at $ 42,645 according to the FT Wilshire bitcoin price indicator. The sharp drop of about $ 47,000 wiped out $ 895 million in stock market positions, in the biggest sell-off since Dec. 3, according to data from Coinglass.

Bitcoin has lost 36% of its value since its all-time high in November, when it traded above $ 67,000.

The influence of events in traditional markets on digital asset prices has increased in recent months due to the involvement of Wall Street players in the cryptocurrency markets. This has tightened the relationship between the stock markets and the price of bitcoin as large investors react to events.

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Despite the turmoil, Goldman Sachs predicted this week that bitcoin could hit $ 100,000 if it took market share away from gold. Both are seen by some analysts and investors as a way to protect portfolios against the high levels of inflation currently sweeping the world.

Zach Pandl, co-head of global currency, interest rate and emerging markets strategy at Goldman, said bitcoin’s share of wallets is likely to increase as the adoption of digital assets continues, which could increase its price.

“Hypothetically, if bitcoin’s share of the store of value market were to reach 50% in the next five years. . . its price would rise to just over $ 100,000, ”Pandl wrote in his research note Wednesday.

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