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Bitcoin Falls to 1-Month Low as Fed Minutes Reveal Talks to Shrink Balance Sheet
A reduction in the balance sheet might undermine bitcoin’s appeal as an inflation hedge.
Bitcoin tumbled to its lowest price in a month as minutes from the Federal Reserve’s last meeting in December showed officials discussed whether to start shrinking the U.S. central bank’s swollen $8.3 trillion balance sheet.
Prices for the cryptocurrency rallied in recent years as a growing number of investors bet that more than $4 trillion of money printing by the Fed to support the coronavirus-racked economy and markets would spur faster inflation – and that bitcoin could serve as a hedge against rising prices.
STORY CONTINUES BELOW
So a move to shrink the balance sheet might put downward pressure on bitcoin.
“Some participants judged that a significant amount of balance sheet shrinkage could be appropriate over the normalization process, especially in light of abundant liquidity in money markets,” according to the minutes from the Fed’s Dec. 14-15 meeting, published Wednesday at 2 p.m. ET (19:00 UTC).
The price of bitcoin (BTC) slid 3.3% on Wednesday, at one point dropping to $43,678, the lowest since Dec. 4.
The original cryptocurrency gained about 60% in 2021 but is down almost 5% so far this year.
Bradley Keoun
Bradley Keoun is CoinDesk's managing editor of tech & protocols, where he oversees a team of reporters covering blockchain technology, and previously ran the global crypto markets team. A two-time Loeb Awards finalist, he previously was chief global finance and economic correspondent for TheStreet and before that worked as an editor and reporter for Bloomberg News in New York and Mexico City, reporting on Wall Street, emerging markets and the energy industry. He started out as a police-beat reporter for the Gainesville Sun in Florida and later worked as a general-assignment reporter for the Chicago Tribune. Originally from Fort Wayne, Indiana, he double-majored in electrical engineering and classical studies as an undergraduate at Duke University and later obtained a master's in journalism from the University of Florida. He is currently based in Austin, Texas, and in his spare time plays guitar, sings in a choir and hikes in the Texas Hill Country. He owns less than $1,000 each of several cryptocurrencies.
