After briefly mounting a recovery yesterday to nearly $40,000, Bitcoin has today since dropped by nearly 5%, according to data from CoinMarketCap.
The largest cryptocurrency by market cap is now trading hands at right around $37,000.
Ethereum, the second-largest cryptocurrency by market cap, isn't faring much better. ETH plummeted from just over $2,900 to $2,750 in just a few hours, amounting to a roughly 5% drop.
The overall market cap for all crypto assets has dropped nearly 7%, falling from $1.89 trillion to $1.77 trillion.
The market's biggest losers include the popular Bored Ape-adjacent governance token ApeCoin, the native asset powering the Near Protocol, and the fast-growing "walk-to-earn" token STEPN, among others.
The market volatility comes amid hawkish action from the U.S. Federal Reserve.
Yesterday, Chairman Jerome Powell raised interest rates by half a point, the largest rate hike since 2000.
When the Fed raises rates, it increases the cost for institutions and individuals to borrow money. It also has the knock-on effect of incentivizing people to save their cash. When put all together, this rate hike is meant to curb rising inflation in the economy—a figure that's been steadily rising amid supply constraints and the ongoing conflict in Ukraine.
Typically, rate hikes also add bearish pressure to the stock market, cryptocurrencies included.
Yesterday's boost in prices across both the crypto and traditional markets appeared to be motivated by relief from investors that the rate hike wasn't higher. "A 75-basis-point [0.75%] increase is not something the committee is actively considering,” Powell said, adding that the economy has "a good chance to have a soft or softish landing" from last year's everything rally.
Now, though, the market appears to be course correcting.
Beyond Bitcoin: Stocks tumble
Digging into the broader financial market also reveals a few key trends among investors. For one, the tech-heavy Nasdaq 100 has plummeted by nearly 5% since the market opened.
Included in that index are also stocks for crypto-adjacent companies like Coinbase, Microstrategy, Tesla, PayPal, and Robinhood.
The stock price for the Brian Armstrong-led crypto exchange has dropped by 11.3%, the Bitcoin-proxy stock MSTR is down 12.3%, and the electric vehicle manufacturer's stock fell by nearly 8%. PayPal and Robinhood dropped by 7.56% and 3%, respectively.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.