Bitcoin fell below $20,000 on Monday as investors dumped risk assets after the US Federal Reserve reiterated its commitment to aggressive tightening.
The world's largest digital currency is down 5% from Friday's close to hit a low of $19,526 overnight, a level not seen since July 13, according to Coin Metrics. Other major digital tokens also sold off, with Ether falling to $1,423, the lowest level in a month.
The sharp drop in cryptocurrencies coincided with a big sell-off in US stocks, triggered by a tough statement by Fed Chairman Jerome Powell about the need to stop inflation at a conference in Jackson Hole. On Friday, the Dow Jones Industrial Average fell 1,000 points after Powell said he expected the central bank to continue raising interest rates in a way that would cause "some pain" to the US economy. Futures point to further losses on Monday.
"Bitcoin weakened after Fed Chairman Powell reiterated without batting an eye that the Fed would tighten policy to bring down inflation," said Edward Moya, senior market analyst at Oanda. "Risk assets are struggling as Powell's fight against inflation will remain aggressive even as it slows the economy."
Bitcoin is down over 3% last week, the third negative week in four. The cryptocurrency has fallen over 50% this year and remains 70% below its all-time high of $68,990.90 hit in November.
The cryptocurrency market has been hit by a number of problems, including the collapse of the algorithmic stablecoin terraUSD, which set off a chain of events that led to the bankruptcy of the Celsius lending platform and hedge fund Three Arrows Capital.