Bitcoin Falls Below $40K for First Time Since Mid-March

Nydig, a bitcoin-focused asset manager, cites fears of rising inflation and a tighter Fed policy as reasons for the drop.

AccessTimeIconApr 11, 2022 at 8:28 p.m. UTC
Updated May 11, 2023 at 5:01 p.m. UTC

Bitcoin, the world's largest cryptocurrency by market capitalization, fell below $40,000 on Monday for the first time since March 16.

The fall in price comes as investors weigh the risks of rising interest rates, soaring inflation and dislocation of global commerce as a result of Russia's invasion of Ukraine.

“The macro environment has investors spooked,” said Armando Aguilar, head of alternative strategies and research at Ledn.

As of press time bitcoin (BTC) was down 8.5% over the past 24 hours to $39,783.

March Consumer Price Index report (CPI Report)

U.S. President Joe Biden's administration on Monday was already warning that the Consumer Price Index report for March, due out early Tuesday, would reveal inflation rising at an "extraordinarily elevated" pace. That could prompt the Federal Reserve to accelerate the pace of interest-rate increases to keep inflation, currently running at a four-decade high, from spiraling out of control.

"Rising interest rate fears and the expectation of tighter monetary conditions continues to be a focus for bitcoin investors," bitcoin-focused asset manager Nydig wrote in a note to investors.

The bitcoin market, which has become unusually synced lately with U.S. stocks, has been pricing in the Federal Reserve's pledge to shrink its nearly $9 trillion balance sheet by as much as $95 billion a month.

A move by the U.S. central bank to reduce its total assets would effectively reverse a key stimulus plan used in 2020 and 2021 to bolster traditional markets, the financial system and the economy; bitcoin's price quadrupled in 2020 and rose 59% last year.

Now traders are assessing the potential impact of the balance sheet reduction – referred to as "quantitative tightening" – along with multiple interest-rate hikes of 50 basis points (0.5 percentage point) each, according to Lucas Outumuro, head of research at IntoTheBlock. In recent economic cycles, the Fed has moved at a slower pace, with hikes of just 25 basis points.

"This has weighed down on risk assets and increased correlations between crypto and stocks," Outumuro said.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Lyllah Ledesma is a CoinDesk Markets reporter currently based in Europe. She holds bitcoin, ether and small amounts of other crypto assets.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.