Bitcoin quickly followed stocks in a sell-off Wednesday—erasing modest gains—after Federal Reserve Chairman Jerome Powell said the central bank might continue its aggressive monetary policy.
Things were looking bright for the largest cryptocurrency by market cap—at first.
The Fed announced its expected interest rate hike of 75 basis points and traders interpreted the news as perhaps the last time the Fed would do so. Bitcoin, Ethereum and the wider crypto market rose with stocks following the announcement.
But Fed Chairman Jermone Powell said shortly after in a press conference that the central bank would keep upping interest rates until inflation was down—spooking Wall Street and crypto traders.
Bitcoin at the time of writing had erased losses and was trading for $20,237 per coin, a 1% 24-hour dip. Earlier today it had hit a high of $20,705, according to CoinGecko data.
Ethereum, the second largest cryptocurrency by market cap, wasn’t doing much better either—down 2.5% in the past day, trading at $1,538.
Crypto was closely following stocks. The S&P500 slid 2% following Powell’s comments, while The Dow Jones Industrial Average dropped 416 points, or 1.3%; the Nasdaq Composite also dropped by 2.8%.
The crypto market has closely followed the stock market this year as those dealing in equities have sold-off assets deemed “risky.”
“The historical record cautions strongly against prematurely loosening policy,” Powell said. “We will stay the course until the job is done.”
“We have some ground left to cover here—and cover it we will,” he added.