Bitcoin fell alongside equity markets on Monday, dipping below $17,000 (£20,774) to prices not seen since October 2020.
Bitcoin (BTC-USD) fell 2.1% in the past week, dipping below $17,000 to $16,761.
Around $2tn in value has been wiped from the combined crypto market in just over 12 months, according to Coingecko.
Check: Crypto live prices
Risky assets such as cryptocurrencies and stocks are still under pressure after the US Federal Reserve warned that it may need to keep tightening its monetary policy into 2023.
Fed chair Jerome Powell’s warning that the US central bank has “more work to do” spooked equity markets. Bitcoin, and by extension the entire cryptocurrency market, has shown a tendency to march in lockstep with the Nasdaq (^IXIC) and S&P 500 (^GSPC).
After notching up rates by 0.5 basis points last Wednesday, Powell said: “We continue to anticipate that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.”
Analysts read this as a signal that more aggressive hikes would be needed in the future to quell rising dollar inflation.
On Friday, the tech-heavy Nasdaq Composite closed down 1%. The S&P 500 slid 1.1% and the Dow Jones Industrial Average (^DJI) was down 0.9%.
Read more: Worst crypto scams and ‘coverups’ of 2022
More market woes followed as BlackRock (BLK), the world’s largest asset manager, warned the Fed won’t “ride to the rescue” in 2023, while equity valuations teeter, and “don’t yet reflect the damage ahead.”
Reacting to the caution amongst investors, ethereum (ETH-USD) followed bitcoin’s trajectory, dropping around 3.1% to $1,205.
However, good news for ethereum holders came recently when the Commodity Futures Trading Commission (CFTC) in the US recognised ethereum, alongside bitcoin, as a commodity.
Bitcoin has dropped 75% since reaching a record high of $69,000 in November 2021.
The current bear market has proved to be more intense than those previously seen, with the CoinDesk Market Index (CMI), the benchmark index of 167 digital assets, falling 3.3% on Monday.