The Federal Reserve is casting a shadow over cryptocurrencies.
Like stocks, cryptocurrencies have extended a selloff to start the year because of expectations that the central bank will raise interest rates as early as March.
Bitcoin, the largest cryptocurrency, is down 8.7% year to date, according to CoinDesk, and the second-largest, ether, is down 14%. That has spilled over to publicly traded crypto companies.
Coinbase Global Inc.
is down 12% so far this year.
Marathon Digital Holdings Inc.
is down 21%.
Riot Blockchain Inc.
is down 16%.
MicroStrategy Inc.,
which makes business software but has invested billions in bitcoin and whose chief executive,
Michael Saylor,
has become a vocal bitcoin advocate, is down 16%.
On Tuesday, bitcoin rose 1.7% to $42,407. Most observers say the $40,000 level for bitcoin is a line in the sand for the bulls, and they expect a churning trade in this range. “The price action of bitcoin is still likely to remain volatile as a result of a hawkish Fed,” said AvaTrade analyst Naeem Aslam.
Over the past two years, bitcoin enjoyed a massive rally and the entire crypto market pushed into the mainstream. Traditional investors entered crypto in droves. While crypto advocates have pined for this so-called “institutional money” for years, the surge has turned out to be a double-edged sword.
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