Bitcoin fell below $ 43,000 on Thursday before bouncing back above that level.
Traders responded to the minutes of the Federal Reserve’s latest meeting, which showed that policymakers can accelerate rate hikes to fight inflation by selling riskier assets like crypto and growth stocks.
Bitcoin, which hit an all-time high of $ 68,990 in 2021, is down about 7% this year.
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Ether, the world’s second largest cryptocurrency, also fell, hitting its lowest level since October before rebounding slightly to $ 3,300.
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In other cryptocurrency news, the last week of 2021 saw a third straight week of investment outflows from cryptocurrency funds, despite crowning a year of strong inflows into digital investment products, data from digital currency manager CoinShares showed.
Outflows from the sector totaled $ 32 million last week, which totaled $ 260 million over the past three weeks, according to CoinShares and Reuters.
For full year 2021, inflows reached $ 9.3 billion, up 36% from 2020.
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Ether inflows doubled from $ 920 million in 2020 to $ 1.3 billion in 2021. Bitcoin saw a 16% increase to $ 6.3 billion.