If you were planning to cash out your cryptocurrency investments this week, maybe it's time to reevaluate.
Cryptocurrency markets joined equities in sinking lower after Federal Reserve governor Lael Brainard reiterated the central bank's commitment to quickly tightening monetary policy.
Among the top 15 digital assets, Dogecoin has experienced the steepest decline over the last 24 hours, losing 15% to settle below $0.15—although it had padded its market cap this week after DOGE activist Elon Musk joined the Twitter board. Solana lost over 12% of its value overnight, dipping under the $116 mark for the first time this month. Polkadot, Shiba Inu, and Avalanche also flirted with double-digit percentage losses.
The top two coins by market capitalization, Bitcoin and Ethereum, shaved 5% and 8% of their price, respectively. In all, the crypto market cap was down 6%, briefly dropping back below $2 trillion. It lost roughly $130 billion in 24 hours.
Equities are also down, with the tech-heavy Nasdaq taking the brunt of it with 2% losses.
All of this came before the Fed released minutes from the Federal Open Market Committee's March meeting, during which it raised interest rates for the first time. Brainard gave a preview of the internal conversations on Tuesday at a Federal Reserve Bank of Minneapolis conference.
"It is of paramount importance to get inflation down,” she said. “Accordingly, the committee will continue tightening monetary policy methodically through a series of interest-rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting.”
Interest rate increases are designed to make the cost of borrowing go up and dampen spending to keep inflation in check. This has knock-on effects for share prices as companies should have less appetite for capital investments or wage increases. There's also less money floating around to sit in crypto accounts.
The minutes themselves shed some light on the Federal Open Market Committee's deliberations. One major talking point was Russia's war on Ukraine. In fact, in light of the invasion the committee agreed to raise the federal funds rate by only 25 basis points—with many leaving open the possibility for more aggressive 50 basis point increases in the future.