Cryptocurrency markets were sluggish Friday after Federal Reserve Chairman Jerome Powell stated that interest rate hikes should be made “more quickly.”

Powell also indicated that a rate hike of 0.5 percentage point was “on the table” for next month.

James Bullard, President of the St. Louis Federal Reserve Bank, said Tuesday that he expects interest rates to reach as high as 3.5 percent by the end of the year.

Bitcoin fell to $40,586 on Friday, down from a daily high of $42,965 at noon, while the whole cryptocurrency market retreated to $1.88 trillion.

Tuesday morning, Bitcoin’s price fell below the $40,000 mark before regaining a few hours later. Bitcoin hovered just above $42,000 on Thursday.

The $40,000 barrier has emerged as a make-or-break point for Bitcoin, market observers say, as its performance from there could set the tone for whether the market reaches another bullish or bearish phase.

With inflation surging, stocks collapsing, and investors clueless on how rapidly the central bank will hike interest rates, many would argue that now is the optimal time to invest in Bitcoin.

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Nonetheless, the world’s most valuable digital asset has shed almost 20% of its value thus far this year, dipping as low as $33,000 on January 25 before recovering. Bitcoin reached an all-time high of roughly $69,000 on November 8, last year, just over three months ago.

Bitcoin’s trading history has been turbulent and volatile from its inception. Cryptocurrency as an asset class continues to evolve in lockstep with the forces that impact its prices.

Cryptocurrencies have continued to track the tech industry’s recent decline, as the Nasdaq fell 2% Friday, the most since middle of March.

Interest rates are being raised in order to counteract rising inflation, which reached 8.5 percent last month. High-growth investments, on the other hand, such as technology, are appraised using a discounted cash flow concept.

Investors have been grappling with rising inflation, geopolitical issues, and concerns about the central bank tightening monetary policy.

The Fed’s March meeting minutes released last week revealed its intention to cut its balance sheet by $95 billion each month to contain inflation.

Meanwhile, in another development, Elon Musk’s electric vehicle company Tesla is hodling Bitcoin.

On the company’s balance sheet, digital assets total $1.261 billion. Since the first three months of last year, the Austin, Texas-based EV giant has neither purchased nor sold any crypto assets.

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