Bitcoin’s appeal as a hedge against inflation is being put to the test, with the largest cryptocurrency slumping along with other risk assets after Jerome Powell failed to ease investor concern about rising price pressures.
The digital token fell as much as 6.7 percent and traded at about $47,900 as of 2:38 p.m. in New York, after the Federal Reserve chairman said he is monitoring financial conditions and would be “concerned” by disorderly markets, but stopped short of offering specific steps — which sent Treasury yields higher and stocks lower.
Bitcoin surged to more than $58,000 last month, with advocates such as MicroStrategy Inc. Chief Executive Officer Michael Saylor touting the token as alternative to cash because of the risk of rising inflation from government and central bank stimulus.
Shares of the enterprise software maker, which has purchased over 90,000 Bitcoins, tumbled as much as 17 percent on Thursday.
Critics say Bitcoin is in a giant, stimulus-fueled bubble that’s destined to burst like the 2017 boom and bust cycle. Bitcoin slid 21 percent last week but is still up more than fivefold in the past year.