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The price of Bitcoin dipped following the release of the Federal Reserve’s December meeting minutes, which showed the central bank’s plans to continue raising interest rates.
The biggest cryptocurrency was down nearly 1%, trading for $16,790, in the hour after the Fed dropped the announcement, according to CoinGecko. It has since made modest gains, and the asset is still up 1.2% in the past 24 hours and 0.5% in the past week.
Ethereum, the second largest digital asset by market cap, dropped by 1% within the hour. Ethereum tends to follow Bitcoin’s movements following announcements from the Fed.
The entire crypto market has been closely related to U.S. stocks since last year. When the Federal Reserve raised interest rates to get inflation under control, investors generally sold U.S. equities, as well as Bitcoin and other digital assets in a bid to shift “risk.”
This year might be no different: stocks and almost every crypto token and coin dropped on the news that the Fed would not step down from its aggressive monetary policy.
“With inflation still well above the Committee’s longer-run goal of 2 percent, participants agreed that inflation was unacceptably high,” the minutes said, adding that an “unwarranted easing in financial conditions” would “complicate the Committee’s effort to restore price stability.”
The minutes also noted the collapse of digital asset exchange FTX—but said it didn’t have a serious effect on the wider financial system.
“While the spillovers from this situation had been significant among other crypto lenders and exchanges, the collapse was not seen as posing broader market risks to the financial system,” the minutes read.
FTX went bankrupt in November, seriously hurting the crypto market and its investors. The company and former CEO Sam Bankman-Fried’s monumental fall has led to a criminal investigation and renewed calls from politicians and regulators to rein-in the industry.