Bitcoin Slides To 3-Week Low After ‘Crypto Coachella’ Fails To Impress Investors

Last week’s Bitcoin 2022 conference in Miami, where 25,000 people gathered to hear the latest developer pitches and glorify Satoshi Nakamoto’s invention, left attendees feeling extra bullish about the future of the original cryptocurrency.

However, that feeling did not immediately carry over to the broader investment community.

On Monday, bitcoin slipped below $41,000 for the first time in about three weeks, dropping 5.14% within 24 hours. As of 1:12 p.m. ET, the asset is changing hands at $40,838. Other cryptocurrencies have fallen further, with ether retracting by nearly 79% over the past 24 hours and solana and cardano losing over 10% each.

This downward shift was not what certain analysts were expecting over the last few days. In fact, some were anticipating a 2022 version of the so-called ‘Consensus Effect’ when prices of digital currencies rallied by as much as 25% in the days leading up to another annual crypto conference, Consensus, in previous years. However, absent any major announcements tokens continued to slide as the bearish macro headwinds prevailed.

A key reason for this negative sentiment was recent news coming out of the Federal Reserve. Minutes from its meeting in March, released last Wednesday, spurred a new wave of market turmoil as officials agreed that they would begin reducing the central bank balance sheet by $95 billion a month, likely beginning in May. Officials also seemed to be setting the table for 50bps increases in the future of the federal funds rate, double the March hike, which was the first increase since 2018. Expectations for a tighter monetary policy hit growth and tech stocks in particular, though cryptocurrencies also took a dive, with bitcoin and ether closing the week down 8% and 7% respectively.

The slide continued even as the Luna Foundation Guard, a nonprofit organization that manages the TerraUSD algorithmic stablecoin, added another $173 million in bitcoin to its wallet over the weekend, boosting its total holdings of the cryptocurrency to almost 40,000 BTC (worth approximately $1.6 billion). The company has stated plans to buy $10 billion worth of bitcoin to back UST.

Additionally, as the fighting in Ukraine escalated to a new stage, the European Union on Friday targeted crypto wallets, banks, currencies and trusts in its fifth package of sanctions on Russia in a bid to plug potential loopholes that could allow Russians to move money abroad. Last month, EU lawmakers voted in favor of measures to outlaw anonymous cryptocurrency transactions, a move, the industry said, that could stifle innovation and invade privacy.