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Bitcoin drops following Fed decision after topping $18,000 for first time in over a month

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Bitcoin prices have been under pressure in 2022 after the collapse of algorithmic stablecoin terraUSD and subsequent bankruptcy filings from lender Celsius and hedge fund Three Arrows Capital.
Nicolas Economou | Nurphoto | Getty Images

Bitcoin fell on Thursday after the U.S. Federal Reserve indicated further interest rate hikes ahead and investors continued to monitor the fallout from the collapse of cryptocurrency exchange FTX.

It came after the world's largest digital currency topped $18,000 Wednesday for the first in more than a month. It was last trading 2% lower at $17,406.33, according to Coin Metrics.

Ether fell 2% too, to $1,268.84, after hitting a more-than one-month high Wednesday of more than $1,350.

Bitcoin reversed after the U.S. Federal Reserve raised its benchmark interest rate by 0.5 percentage points to its highest level in 15 years, and indicated there would be further hikes next year. U.S. stocks fell too.

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"Overall, bitcoin remains in an uptrend following its mid-November bottom," said Lyn Alden, founder of Lyn Alden Investment Strategy.

"The year 2022 was characterized by a hawkish Fed and valuation reductions on equities and other assets," she added. "Going forward into 2023, I think a slowdown in corporate earnings, rather than valuation compression, is likely what will keep pressure on equities while potentially allowing monetary assets such as bitcoin and precious metals to stabilize."

Market sentiment remains low as investors monitor the continued fallout from the sudden collapse of FTX, which led to arrest and indictment of the once popular crypto exchange's founder, Sam Bankman-Fried — although crypto prices have been relatively stable since the initial FTX-induced crash.

Meanwhile, Binance, the world's largest crypto exchange, has seen billions of dollars in customer funds exit the platform this week amid scrutiny over its reserves, although data suggests those fears may be overblown.

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