While just at the end of last week, the value of Bitcoin was approaching the $30,000 mark almost flawlessly, its growth halted just above $28,000, and the most widely used cryptocurrency took the opposite direction. However, during Wednesday’s trading, there was a decline of over three percent. The blame for this was placed on the statements of an influential American central banker.

“I don’t really see any compelling reason to pause the rate hikes,” said Loretta Mester, the head of the Cleveland branch of the Federal Reserve System (the U.S. central bank).

“I would rather lean towards further rate hikes and keeping them at an elevated level until we are more certain about the direction of the economy,” Mester added in an interview with the British newspaper Financial Times.

Mester’s words triggered sell-offs in the cryptocurrency market, with Bitcoin itself experiencing a drop from over $28,000 to below $27,000 within a few hours.

In a short period of time, Bitcoin lost more than three percent of its value. Similar losses were also recorded for other cryptocurrencies, especially Ethereum and Binance Coin.

Further tightening of monetary policy by the Federal Reserve is bad news for cryptocurrency investors (and not just for them).

The Fed is signaling that it is not willing to tolerate inflation well above its two percent target, and thus intends to create conditions in the market that will lead to the reduction of excess liquidity. Consequently, resources for investments in cryptocurrencies or other assets are limited.

As a result, there are sell-offs as investors try to get rid of crypto-assets before their prices drop, which, however, triggers the decline in value itself.

Source: Smith – Financial Times, Godbole – CoinDesk.com