- Crypto and traditional markets continue to experience broad sell-offs in response to the Federal Reserve’s tighter monetary policy
- Glassnode reports that the rush to de-risk assets like Bitcoin pushed the network’s transaction fees about 15% above average
Cryptocurrency markets have been under pressure since Bitcoin—the largest crypto token—fell below $40,000 on April 28. The decline accelerated last Thursday and intensified through the following sessions.
Yesterday, Bitcoin dropped below $30,000 for the first time since July 2021 as both traditional and crypto markets increased selling in reaction to the US Federal Reserve’s renewed aggressive stance on monetary policy.
During yesterday’s trading session, CoinMarketCap recorded Bitcoin as low as $29,944. Although the price has recovered somewhat to $31,751, the leading digital currency remains far from its all-time high, currently down about 53.75% from that peak.
Network activity surged as investors rushed to de-risk
In this week’s issue of Glassnode’s Week On-chain report, the blockchain analytics firm highlighted a recent surge in activity on the Bitcoin network. Glassnode observed a spike in urgent transactions as investors attempted to reduce exposure to risky positions.
As traders prioritized speed, fees paid to process transactions in Bitcoin’s mempool rose roughly 15% above typical levels. The higher fees indicate demand for faster confirmations as market participants scrambled to move funds.
Glassnode also noted a slowdown in accumulation by larger holders. Most of the new inflows that did occur were concentrated among “shrimps”—addresses holding less than 1 BTC—yet even that cohort accumulated less last week than in recent months.
Federal Reserve influence
The Federal Open Market Committee met from May 3 to May 4. Markets initially reacted positively when Fed Chair Jerome Powell ruled out a 75-basis-point rate increase, and the committee instead delivered the widely expected 50-basis-point hike.
With the Fed signaling ongoing tightening—reducing liquidity and raising interest rates to counter persistent inflation—risk assets, including cryptocurrencies, face continued downward pressure. Higher interest rates typically make speculative assets less attractive and can trigger portfolio deleveraging.
Bitcoin’s drop to a ten-month low has fed a broader sell-off across altcoin markets. Many major tokens have suffered double-digit losses over the past week.
For example, Ether (ETH) is trading near $2,430, down about 16.24% over seven days. Binance Coin (BNB) is down roughly 17%, Solana has fallen about 14.28%, and Terra’s native token LUNA plunged approximately 61.77%—the steepest decline among leading tokens in this timeframe. LUNA’s collapse coincided with its stablecoin UST losing its peg over the weekend, intensifying the market rout.