Bitcoin, the world's leading digital currency by market cap, fell to $56,757.93, falling below $57,000 for the first time since February 28, according to data from CoinGecko.
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Bitcoin was last down 6.3% on Wednesday at $57,505.24. Rival cryptocurrencies ethereum, Solana and XRP fell 4.5%, 5.9% and 1.4% respectively.
The participants in the cryptocurrency market are watching the upcoming decision on interest rates from the US Federal Reserve. The Federal Open Market Committee is set 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 lower interest rates. Investors are looking to Fed Chairman Jerome Powellabout what needs to happen before interest rates are cut.
Bitcoin is known to trade more heavily than traditional risk assets like stocks. proponents have described it as a hedge against rising inflation – but the contract’s track record here is mixed.
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Geoff Kendrick, head of digital asset research at Standard Chartered, said on Wednesday that bitcoin's drop below $60,000 "has reopened a path to the $50,000-$52,000 range."
He noted that the main factors affecting the cryptocurrency were five consecutive days of outflows from mutual funds traded on the US bitcoin exchange, as well as the worsening macroeconomic environment and worsening market liquidity.
Kendrick added that the reaction to the launch of spot bitcoin ETFs in Hong Kong earlier this week was “poor,” focusing on the ETF’s small first-day trading volume in the millions of dollars, despite the ETF’s net asset positions being stable.
“Amid strong U.S. inflation data and less chance of a Fed rate cut, liquidity matters right now,” Kendrick said in the note.
See also: Bitcoin makes impressive recovery
The price drop in bitcoin and cryptocurrency markets in general also comes a day after former Binance CEO Changpeng Zhao was sentenced to four months in prison on money laundering charges .
Source: cnbc
