Bitcoin retreats, extends recent declines

Crypto markets also largely lagged a rally in global technology shares despite historically tracking the sector

Bitcoin retreated on Thursday, extending recent declines after some hawkish signals from the minutes of the U.S. central bank’s January meeting sparked more uncertainty over the outlook for interest rates.

Cryptocurrency prices were also pressured by risk aversion in the face of heightened geopolitical tensions between Iran and the U.S., and largely lagged gold, which benefited from safe-haven demand.

Bitcoin dropped 1.8% to $66,042.0 by 14:30 GMT.

Crypto markets also largely lagged a rally in global technology shares despite historically tracking the sector.

Bitcoin remained under pressure from heightened uncertainty over the outlook for U.S. interest rates, with the Fed minutes providing little relief.

The minutes of the Fed’s January meeting showed policymakers growing increasingly divided over the long-term path of rates and inflation, with “several” members even suggesting that rate hikes may be in order if sticky inflation persists.

Several officials indicated cuts would resume only if inflation declines as expected, while some supported language acknowledging hikes could be appropriate if inflation remains above target. That nuance widens the policy range and tempers confidence around mid-year easing, keeping risk assets in consolidation mode, said Iliya Kalchev, Nexo Dispatch analyst.

Fed members were seen expressing uncertainty over the impact of artificial intelligence on the economy, with members divided over whether the tech will hurt or help growth.

Crypto markets were especially spooked by the central bank’s comments on rate hikes, given that higher rates bode poorly for entirely speculative assets such as Bitcoin. Traders were seen pivoting into the dollar following the Fed minutes.

Broader crypto prices were largely rangebound amid a dearth of positive cues for the sector. Like Bitcoin, most altcoins were also nursing dire losses in recent months, as investor sentiment towards crypto weakened across the board.