Bitcoin, the flagship crypto currency lost about $4K in just a few hours after notes from the Fed’s December FOMC session re-confirmed plans to reduce the balance sheet.

As the dollar strengthened and positive economic data from the U.S. shook investors’ grip on risky financial assets, bitcoin dropped to $42.5K with record-selling observed in the early hours of Thursday.

An intraday sell-off was triggered after the Federal Reserve indicated a rate hike may occur in March rather than the usual timeframe.

More than $800 million worth of trading positions were liquidated during the day, with 207,527 traders liquidated. $10 million worth of XBTUSD was liquidated on Bitmex.

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As investors rush to safe-haven currencies, others are turning to alternative cryptocurrencies (altcoins) like Solana, XRP, and Polkadot, which are down more than 10%.

For now, despite the spotlight on altcoins, buying pressures have declined in both Bitcoin and Ethereum. If BTC does not break back above $45K, the market may experience an extended bear period in which it could retrace to the low $30K range.

Crypto market capitalization is $2.04 trillion, down 8.53% since yesterday. However, activity is on the surge as the total crypto market volume for the day is $122 billion, an increase of 18.25%. 

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At present, bitcoin dominates the market with 39.74%, up by 0.39% since yesterday. BTC’s dominance ratio – or the measure of BTC’s market capitalization in relation to all crypto – continued to decline on Wednesday, reaching 39%.  This is the lowest ratio since April 2018, when crypto markets were in a bear market.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry