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(Bloomberg) -- Bitcoin and other cryptocurrencies slid on Friday as investors continued to bail from riskier assets following the Federal Reserve’s promise that it will stay aggressive in its fight against inflation.

The largest digital coin by market value fell as much as 3.7% during the session to trade around $18,538. Ether, the second-largest, was down 4.7% at one point to $1,262, while an index of 100 of the largest coins lost 1.6%. The S&P 500, meanwhile, was down 2% a little before noon in New York. 

The mood in the market has remained sour as the Fed and other global central banks raise interest rates to fight sticky price increases. The Fed delivered its third straight 75-basis point hike this week, and risk assets have taken a hit as Jerome Powell made it crystal clear that the central bank is going to keep raising rates sharply -- until officials see signs that price pressures are easing. 

“It’s going to be a tough environment for crypto,” Chris Gaffney, president of world markets at TIAA Bank, said in an interview. “Sitting in an asset class that doesn’t earn you anything becomes very difficult, and the cost of owning crypto increases as interest rates increase because of alternatives.”

The crypto sector was already reeling from a $2 trillion plunge from a 2021 record high, an unraveling pockmarked with blowups such as the Three Arrows Capital hedge fund and the Terraform Labs project -- whose co-founder Do Kwon is wanted by authorities.

“Macro continues to be a challenging theme, pressuring both crypto and equities as central banks still tighten in the quest to soften elevated inflation numbers,” crypto lender BlockFi wrote in a note. 

Chart watchers, cognizant of how quickly crypto can tank, are looking at $17,599 as a key price level for Bitcoin, should the token continue to post declines. That’s the low it hit in June. After that, they’re watching $17,589 -- should Bitcoin hit that mark, it would touch its lowest point since the end of 2020. 

“Bitcoin is lower alongside other risk assets today, and I would assume it’s a reflection of general bearishness rather than something specific to Bitcoin,” Katie Stockton, managing partner at Fairlead Strategies, said. “The short-term indicators continue to point lower as support is tested.”

Bitcoin’s dominance has waned in recent months amid the selloff. That could be because it’s losing its appeal as an alternative store of value or because more value is being created elsewhere in the crypto ecosystem, according to a note from Charlie Erith of ByteTree Asset Management. 

“Is Bitcoin losing its appeal? It’s certainly taken some knocks,” Erith wrote. 

Risk assets in general are suffering, says Brian Pellegrini, founder of research firm Intertemporal Economics. “The market is believing the Fed’s rhetoric and all leveraged trades are pulling back,” he said.

Crypto and stocks have traded in tandem all year as both have been impacted by the Fed’s policy path. The 60-day correlation coefficient of Bitcoin and the S&P 500 currently stands around 0.70, among the highest such readings in Bloomberg data going back to 2010 (A coefficient of 1 means the assets are moving in lockstep, while minus-1 would show they’re moving in opposite directions.)

Shiliang Tang, chief investment officer at crypto asset investment firm LedgerPrime, added that going into the weekend, people might be “derisking a bit into possible margin calls Monday.”