Bitcoin’s appeal as a hedge against inflation is being put to the test, with the largest cryptocurrency slumping along with other risk assets after Jerome Powell failed to ease investor concern about rising price pressures.

The digital token fell as much as 6.7 per cent and traded at about US$47,900 as of 2:38 p.m. in New York, after the Federal Reserve chairman said he is monitoring financial conditions and would be “concerned” by disorderly markets, but stopped short of offering specific steps -- which sent Treasury yields higher and stocks lower.

“Once it feels like the market is in risk-off mode, which it clearly is, because if you’re selling everything except for energy, that’s very risk-off,” said Arthur Hogan, chief market strategist at National Securities Corp. “It really doesn’t matter whether you are Bitcoin or Ark or semis or banks -- every thing’s being thrown over the transom.”

Bitcoin surged to more than US$58,000 last month, with advocates such as MicroStrategy Inc. Chief Executive Officer Michael Saylor touting the token as alternative to cash because of the risk of rising inflation from government and central bank stimulus. Shares of the enterprise software maker, which has purchased over 90,000 Bitcoins, tumbled as much as 17 per cent on Thursday.

Critics say Bitcoin is in a giant, stimulus-fueled bubble that’s destined to burst like the 2017 boom and bust cycle. Bitcoin slid 21 per cent last week but is still up more than fivefold in the past year.