Bitcoin fell more than 20%, hitting a multi-month low after the head of the US Federal Reserve spoke on the possible acceleration of the economic stimulus program closure.
On December 4 and 5, the cryptocurrency market turned red, falling to multi-month lows. According to CoinMarketCap, on December 4, the bitcoin price dipped more than 20% to $42,000. On December 5, the first cryptocurrency recovered partially but was still trading 8% below Friday’s levels.
The fall in the crypto market followed a massive sell-off in the stock market, which was triggered by investor concerns about the spread of the new strain of the Omicron coronavirus and a statement by the head of the US Federal Reserve System (FRS) Jerome Powell about the possible acceleration of the economic stimulus program closure. This decision can be made at the next meeting of the US Federal Reserve on December 14-15. According to him, the Fed may abandon the asset repurchase program due to growing inflationary risks and the need to raise the key rate.
“At this point the economy is very strong and inflationary pressures are high and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases … perhaps a few months sooner. We’re going to have a discussion about accelerating that taper,” Powell said.
Another negative factor that accelerated the fall of bitcoin could be the closure of crypto derivatives with a high proportion of leveraged funds, says Noel Acheson, head of the market analysis department at Genesis Global Trading. She mentioned a large sell order that could have triggered a bond demand and liquidation.