Bitcoin's recent price drops were not slowing down, and the cryptocurrency finally dipped below $20,000 for the first time in about six weeks. The total loss of crypto coins in this space has caused almost $400 million of liquidations from over-leveraged traders.
Bitcoin has been relatively stable in the past week, with no significant changes to its price movements. BTC spent most of its time around the $21,000 mark after falling by over $4000 just last week. Jerome Powell addressed the nation once again, repeating a previous stance on how to fight inflation. The price of Bitcoin fell sharply to $21,500 after his speech.
The crypto markets immediately dropped in price when the news came out. Bitcoin's value fell by $1,000 in hours and then plummeted. Due to this, the price of Bitcoin has dipped below $20,000 for the first time since mid-July.
The other cryptocurrencies are not faring any better. The price of some popular altcoins is down by double-digits, including Ethereum and its competitors. Ethereum fell below $1,500 after riding high above it two days ago.
The crypto market cap continues its decline towards $1 trillion, with more violent retracements from most altcoins. It's been a tough year for over-leveraged traders. CoinGlass data shows that in just 24 hours, almost $400 million worth of liquidations has happened.
The bitcoin markets have been volatile this week. More than 125,000 traders have already lost money, with the single largest liquidated position on OKX – worth $3.5 million.
During the annual policy event in Jackson Hole, Wyoming, the president reiterated the Fed's commitment to curb inflation, which is still near its highest level in over four decades. The US annual inflation rate eased slightly in July, reaching 8.5% after hitting a more than 40-year high of 9.1% in June.
Powell advanced in this line that he expects the central bank to continue promoting an aggressive approach to increasing interest rates, which, he warned, could cause more " pain " in the economy. Throughout 2022, the FED has made a total of four consecutive increases in interest rates for a total of 2.25 percentage points, as CNBC recalls.
However, Powell does not see this as a " place to stop or pause, "especially with inflation running well above the Fed's long-term target of 2%.
Digital currencies were not the only ones to react adversely to Powell's comments. According to CNBC, stock market shares also posted losses briefly after the start of the speech, with the Dow Jones Industrial Average down almost 200 points. Although the market then stabilized.
At press time, Bitcoin is trading around $20,215, down 3.4% in the last 24 hours. Ether (ETH), the second largest cryptocurrency, has extended slightly larger losses of 5.7% in the last 24 hours and is trading below the $1,700 barrier. The rest of the market is also dominated by red numbers.
The cryptocurrency market has pulled back severely this 2022 after the all-time highs of November and amid the Fed's aggressive policy to control inflation.
Some experts, including Fidelity Digital Assets research analyst Jack Neureuter, agree that politics is likely to remain a hurdle for both crypto and all short-term risk assets. Neureuter is optimistic that an eventual easing of rate hikes in the face of slowing inflation could bring some respite to crypto markets.
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