Bitcoin tumbled near $22,000 on Tuesday, falling in line with the Wall Street stock market amid concerns about the US Federal Reserve (Fed) accelerating interest rate hikes, which could drag down market liquidity.
The leading cryptocurrency fell 0.90% to $22,226.53, as the Dow Jones Industrial Average dropped more than 300 points to nearly 33,000 after Fed Chairman Jerome Powell signaled a more-than-expected rate hike to curb inflation.
Investors are now predicting a more significant rate hike of 0.50% this month, with the latest CME Group FedWatch Tool showing investors weighing 54.3% on the Fed raising interest rates by 0.50% to a range of 5.00-5.25% at its March 21-22 meeting, and 45.7% weighing on the Fed increasing the interest rate by 0.25%.
Prior to Powell’s speech, investors had predicted a rate hike of 0.25% this month, with only 31.4% predicting a 0.50% hike.
Bitcoin, which hit a historic high of over $69,000 in November 2021, sank below $20,000 in June 2022, amid concerns that the Fed’s acceleration in raising interest rates and shrinking its balance sheet could drag down market liquidity.