Bitcoin and other major cryptocurrencies suffer heavy falls after US Federal Reserve news

Things are going from bad to worse for cryptocurrency holders, as bitcoin and major token prices went into free fall overnight.

Things are going from bad to worse for cryptocurrency holders, as bitcoin and major token prices went into free fall overnight — after an already testing couple of weeks.

The bitcoin price has lost thousands of dollars in a matter of hours, dropping from over $US47,000 per bitcoin to under $US44,000 this morning.

The bitcoin price is now down almost 40 per cent from its highest of almost $US70,000 set in November — and almost all other digital tokens are following the downward trend.

Bitcoin is tumbling. Below 45K. pic.twitter.com/6Fh12wkzxG

— Joe Weisenthal (@TheStalwart) January 5, 2022

Prices on Coindesk this morning show other major tokens like ether, XRP, cardano and solana have suffered heavy losses overnight — losing between 3-5 per cent and wiping billions of dollars of value from the combined $US2.1 trillion crypto market.

Almost all major cryptocurrencies are down this morning. Picture: Coindesk

Cryptocurrency prices fell along with stock markets after the US Federal Reserve released meeting minutes indicating officials were ready to hike rates sooner than expected next year as inflation spikes.

Sentiment turned sharply sour after the Fed released the report on its December policy meeting that showed central bankers saying “it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated”.

Markets have risen during the Covid-19 pandemic after the Fed cut the interest rate to zero, and the tech sector especially prospered from the easy money policies.

While the forecasts from Fed officials last month indicated they expect as many as three rate hikes in 2022, the minutes showed they were ready to act more aggressively to fight inflation, which could potentially tighten conditions for businesses.

Bitcoin’s dominance could be finished

Despite the slump across almost all cryptocurrencies over the past month, there are signs of bitcoin’s dominance coming to an end.

Coindesk reports ethereum, the second-largest cryptocurrency by market cap, is roughly 50 per cent away from overtaking bitcoin as the largest cryptocurrency.

Bitcoin’s dominance is now looking shaky. Picture: Ozan Kose / AFP

Some analysts refer to the battle for crypto’s top crown as “the flippening”. Over the past year, ether has gained ground versus bitcoin across several metrics, including active addresses, Google search interest and transaction counts.