Bitcoin (BTC) suffered its biggest daily drop in the past two weeks on Tuesday (04) after U.S. Treasury Secretary Janet Yellen indicated a possible interest rate hike. The comment affected the cryptocurrency market in general, causing a liquidation of digital assets and causing the price of almost all currencies, except dogecoin (DOGE), to fall.
Possible increase in interest rates creates fear among investors
In an interview with the The Atlantic, Yellen said the correction might be necessary in the face of high spending by the US government and to prevent an overheating of the economy. However, his statement caused a retraction in the investment market. Shares on the stock exchange and cryptocurrencies are no longer so attractive since fixed income yields benefit from the increase in interest rates and are once again an option.
“Interest rates may have to go up a bit to make sure our economy doesn’t overheat,” said Yellen. “Even if the additional spending is relatively small given the size of the economy, it could cause some very modest increases in interest rates to achieve this reallocation.”
Yellen had originally been discussing his intention to raise interest rates due to US President Joe Biden’s plans to insert $ 4 trillion into the economy. His statement intensified fears that a possible reversal in stimulus measures could cause traditional and digital asset prices to plummet. As a result, investors started selling stocks and cryptocurrencies to protect themselves.
Bitcoin and ether fall after Yellen’s speech
Bitcoin (BTC), the largest cryptocurrency on the market, came to trade for $ 59,000 on Monday (03). After Yellen’s speech on Tuesday, the digital currency plummeted to a low of $ 53,600, according to the index CoinDesk.
The ether (ETH), native to the blockchain Ethereum and the second digital currency with the highest market value, was in a sequence of nine straight days of appreciation. The cryptocurrency set a new price record of $ 3,530 early Tuesday, but also dropped to $ 3,174 a few hours later.
Dogecoin ignores market trend and keeps going up
Even with the entire cryptocurrency market falling, dogecoin (DOGE) follows its own rules. The digital currency based on a Shiba Inu dog meme was not affected by Yellen’s speech, quite the contrary, it keeps breaking new records.
Yesterday, dogecoin reached a new high, surpassing half a dollar for the first time in its history. However, the cryptocurrency meme did not stop there and rose to the $ 0.69 registered on Wednesday (05).
DOGE has more than doubled in value since the beginning of May, driven by statements by Elon Musk, CEO of Tesla and SpaceX, and by a growing popularity that has caused new exchanges to begin trading the cryptocurrency in the face of a very high purchase demand. .
Yellen eases statement after negative impact
After indicating the need for a possible increase in interest rates, the United States Treasury Secretary softened his statements. “It’s not something I’m predicting or recommending,” clarified Yellen during an online event organized by Wall Street Journal this Wednesday. “If anyone appreciates the independence of the Federal Reserve, I think it’s me,” he added.
It didn’t take long for the cryptocurrency market to show its rapid recovery. Bitcoin has already risen again to the $ 57,000 level this afternoon, while ether is trading for around $ 3,400 at the time of this publication.
With information: CoinDesk, Bloomberg