The logo of the cryptocurrency Bitcoin (BTC) can be seen on a coin standing in front of the Bitcoin graph.

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Bitcoin fell sharply to its lowest level in more than two months on Wednesday amid broader risk-averse sentiment in markets as investors eyed the US Federal Reserve’s upcoming interest rate decision.

The world’s top digital currency by market value fell to $56,757.93, falling below $57,000 for the first time since February 28, according to data from CoinGecko.

Bitcoin last fell 6.3% on Wednesday to $57,505.24.

Competing cryptocurrencies Ether, Solana and XRP fell 4.5%, 5.9% and 1.4% respectively.

Crypto market participants are watching the upcoming interest rate decision from the US Federal Reserve. The Federal Open Market Committee is scheduled to meet on Wednesday afternoon to discuss its latest policy on interest rates.

Markets have become more volatile recently as investors worry about the prospect of a longer path to interest rate cuts. Investors are looking to Fed Chairman Jerome Powell for clues on what needs to happen before interest rates fall.

Bitcoins are known to trade more like traditional risky assets such as stocks. Its backers have described it as a hedge against rising inflation – but the token’s track record here has been mixed.

Jeff Kendrick, head of digital asset research at Standard Chartered, said in a note on Wednesday that bitcoin’s drop below $60,000 “has now reopened a path to the 50-52k range.”

“The driver appears to be a combination of crypto-specific and broader macro,” Kendrick said.

He noted that the main factors affecting the token were five consecutive days of outflows from US spot exchange-traded funds, as well as a worsening macro background and deteriorating market liquidity.

Kendrick added that the reaction to the launch of the spot bitcoin ETF in Hong Kong earlier this week had been “poor”, focusing on the ETF’s small first-day trading volume in the millions of dollars, even though the ETF’s net asset positions were stable.

“Of course liquidity matters when it matters, but with strong US inflation data and a less likely Fed rate cut, it’s important right now,” Kendrick said in the note.

The bearish price action in crypto markets also comes a day after Binance’s former CEO, Changpeng Zhao, was sentenced to four months in prison on money laundering charges.