Crypto Market Dips Ahead of Upcoming Fed Meeting
Categories: Crypto News US
Crypto Market Dips Ahead of Upcoming Fed Meeting
The prices of bitcoin, ethereum and other major cryptocurrencies fell on Monday as the Federal Reserve expects its benchmark interest rate to increase by 0.75%, the biggest increase in nearly three decades. At the time of writing, Bitcoin is down 2.8% over the past 24 hours to a weekly low of around $21,935, while Ethereum, the second largest cryptocurrency by market, is down almost 5% for the day at its current price of $1,528.
Among the ten largest crypto assets, Cardano is the hardest hit with a decline of nearly 7% over the day, followed by Solana (-4.35%), Dogecoin (-4.4%), and XRP (-4.15%). The combined market capitalization of all cryptocurrencies has fallen from $1.08 trillion last Wednesday to $1 trillion at press time, according to data provided by CoinMarketCap.
The latest price action comes ahead of a two-day Federal Reserve meeting starting Tuesday, which is expected to wrap up with the US central bank raising interest rates by 75 basis points. Fed officials have raised benchmark short-term lending rates by 1.5% this year, including a 75 basis point increase in June - the biggest such increase in nearly three decades.
The move, which the Fed considers its main weapon to curb rising inflation, would see the interest rate -- the rate banks charge each other for overnight loans -- rise to a target range of 2.25% to 2.50%. Which means that support for the pandemic-era US economy is effectively ending.
When the federal funds rate rises, it affects the entire economy: adjustable-rate mortgages, home equity lines of credit, credit cards, student loans, and savings deposits, and other loans are becoming more expensive. Interestingly, though, US inflation has actually accelerated since the Fed began raising rates in March - with gas, food and rent prices rising to a four-decade high of 9.1%. has reached.
An increase in interest rates on stocks, cryptocurrencies and other risky investments could also come into play, bringing the risk of reduced capital flows and, ultimately, declining economic growth. US The expected increase in interest rates in the U.S. also follows a similar move by the European Central Bank last Thursday when the benchmark interest rate in the eurozone rose 0.5%.