The price of bitcoin fell to a three-month low Saturday, continuing a slide that began Wednesday when the Federal Reserve sparked a broad sell-off by cautioning it may move more quickly than previously expected to reverse policy meant to bolster the economy during the pandemic, and experts forecast the latest crypto market drawback is likely to go on for weeks.
Bitcoin fell as much as 3% to below $41,000 by 1:45 p.m. ET, according to crypto data website CoinMarketCap, bringing its losses to more than 12% since the Fed warned it may move more aggressively to remove pandemic-era stimulus as it looks to combat high levels of inflation.
In a weekend email, analyst Yuya Hasegawa of cryptocurrency broker Bitbank cautioned he expects the world’s largest cryptocurrency could continue falling until the broader market, which has similarly struggled since the Fed’s Wednesday announcement, digests the likelihood of the Fed hiking interest rates as soon as March.
Hasegawa said bitcoin could fall as low as $40,000 in the near term, but that the government’s consumer price index report due out next Wednesday could bring a rebound if it shows inflation spiked more than expected, stoking the inflationary fears that have lifted bitcoin to new highs as recently as November.
On Thursday, crypto billionaire Mike Novogratz, the CEO of financial services firm Galaxy Digital, told CNBC the selloff could push bitcoin down another 8% from current prices to as low as $38,000—a level unseen since early August.
“I’m not nervous in the medium term but we’re going to have a lot of volatility in the next few weeks,” the staunch bitcoin bull said told CNBC, before pointing to booming institutional adoption as a bullish indicator for the nascent space.
Novogratz wasn’t alone among billionaire crypto investors cheering bitcoin on during its latest sell-off: “So. much. money. patiently waiting to [buy the dip] in bitcoin,” Barry Silbert, the founder and CEO of crypto firm Digital Currency Group, wrote on Twitter Saturday afternoon.
Bitcoin was far from alone in falling Saturday afternoon. Over the past 24 hours, ether, binance coin and sol were down 5%, 6% and 3%, respectively—pushing losses to roughly 20% apiece over the last week.”Bitcoin remains vulnerable to a breach of the $40,000 level, and it could get bad for ether if it breaks the $3,000 level,” Oanda Senior Market Analyst Ed Moya wrote in a Friday email. Ether prices clocked in at about $3,034 on Saturday. “The long-term outlook is still bullish for both the top two cryptocurrencies, but the short-term is looking ugly.”
Despite bitcoin’s bouts of intense volatility, Goldman Sachs co-head of global foreign exchange Zach Pandl wrote in a note to clients this week that the cryptocurrency could top $100,000 in the next five years. Pandl said he expects bitcoin’s share of the crypto market, currently about 41%, “will most likely rise over time as a byproduct of broader adoption of digital assets” and that the cryptocurrency will increasingly compete with gold as a hedge against inflation.
$1.9 trillion. That’s the value of all the world’s cryptocurrencies Saturday afternoon, down more than $300 billion, or 14%, since Wednesday and more than $1 trillion below an all-time high of $3 trillion in November. Over the last five years, bitcoin prices have skyrocketed about 4,300%.
I’m a senior reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at firstname.lastname@example.org. And follow me on Twitter @Jon_Ponciano
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