Bitcoin dropped to its lowest level in six months on Friday as a broad sell-off in risk assets intensified amid fading hopes that the U.S. Federal Reserve would cut interest rates at its upcoming policy meeting.
However, U.S. stock selling eased slightly in the afternoon ahead of the weekend, though investors remained anxious as they prepared for a slew of economic data next week following the reopening of the government after a record 43-day shutdown, Reuters reports.
“Bitcoin and cryptocurrencies in general have benefited from a positive correlation with strong equity market performance, so they have not become an alternative store of value to hedge against fear in other sectors,” said Juan Perez, Trading Director at Monex USA in Washington.
Risk assets in general have come under pressure in recent days, as expectations for a rate cut by the Fed next month have diminished, while an increasing number of policymakers signaled a tendency not to ease policy.
Jeffrey Schmid, President of the Federal Reserve Bank of Kansas City and a voter on the Federal Open Market Committee, was the latest central bank official to express doubts about a December rate cut. He said on Friday that his concerns about “very high” inflation go beyond the narrow effects of tariffs alone.
Bitcoin, the world’s largest cryptocurrency, fell 2.3% to $96,564, having earlier dropped to $95,885.33—the lowest level since May 7.
