Bitcoin falls to record low: what are the main reasons?
30 January 13:11
Bitcoin (BTC) fell to a two-month low on Friday, January 30, amid growing speculation about possible changes in the US Federal Reserve’s leadership, which could lead to tighter monetary policy and reduced liquidity in the financial system.
This was reported by "Komersant Ukrainian" with reference to Reuters.
The largest cryptocurrency fell 2.5% to $82,300, continuing the decline of the previous session and approaching its fourth consecutive month of losses, the longest losing streak in eight years.
Overall, Bitcoin has lost about a third of its value since reaching record highs in October.
The sell-off intensified after reports that former Fed Chairman Kevin Warsh was likely to be appointed to replace current Fed Chairman Jerome Powell. Warsh has previously advocated for a change in Federal Reserve policy, including a reduction in its balance sheet.
Analysts note that cryptocurrencies traditionally benefit from the Fed’s large balance sheet and excess liquidity, which supports speculative assets. Expectations of a rollback of such stimulus measures have negatively affected risky instruments and at the same time supported the dollar.
“When there is talk of a Fed balance sheet reduction, assets that have served as a hedge against its expansion — gold, cryptocurrencies, and bonds — begin to sell off,” said Damien Boy, portfolio strategist at Wilson Asset Management.
Ether also fell to a two-month low, losing 2.9% and trading at $2,735.48.
According to Sean Dawson, head of research at Derive.xyz, the market continues to be influenced by expectations of tighter monetary policy and concerns about excessive investment in artificial intelligence. Additional pressure on investor sentiment came from a drop in Microsoft shares after a report of significant AI development spending with only a slight beat on revenue forecasts.
