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Jan 31 (Reuters) – Bitcoin (BTC-USD), the world’s largest cryptocurrency by market value, was down by 6.53% at $78,719.63 at 12:48 p.m. ET (1748 GMT) \u200bon Saturday, continuing its decline from the previous session.<\/p>\n
On Friday, bitcoin \u200cfell to as low as $81,104, the lowest since November 21, while the U.S. dollar gained \u200cafter former Federal Reserve Governor Kevin Warsh was selected as the next Fed chair. Some investors and traders are concerned he might tighten up on cash in the financial system.<\/p>\n
Warsh has called for regime change at the central \u2060bank and wants, among other \u200cthings, a smaller Fed balance sheet.<\/p>\n
Bitcoin \u2060and other cryptocurrencies have been regarded as beneficiaries of a large balance sheet, \u200dhaving tended \u200dto rally while the Fed greased money markets with liquidity – a support for \u200cspeculative \u200cassets.<\/p>\n
Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said the Fed’s “bloated \u200bbalance sheet combined with heavy-handed bank regulation” had kept liquidity trapped on \u200cWall Street instead of flowing to Main Street, helping fuel bubbles in assets such as bonds, crypto, metals and meme stocks.<\/p>\n
Ether also fell 11.76% to $2,387.77 on Saturday afternoon. Cryptocurrencies have been struggling for direction since tumbling last year, having been left behind by big rallies in gold and stocks.<\/p>\n
“Sometimes \u2060these price adjustments feed on themselves,” Jacobsen said, \u200badding that Friday\u2019s abrupt drop had reminded \u200bpeople of the risks. He said it was “possible, if not likely, that we see more selling over the next few \u200ddays.”<\/p>\n
Cryptos are having a \u2060rough time in what was once hoped to be a golden era of flows and friendly regulation under President Donald Trump. Market-leading \u2060bitcoin has lost a third of its value since striking record highs in October \u200clast year.<\/p>\n
(Reporting by Anusha Shah in Bengaluru and Megan Davies; editing \u200cby Diane Craft and Nia Williams)<\/p>\n<\/p><\/div>\n