How are major cryptocurrencies doing ahead of the September 21 FOMC meeting?

The crypto market has had a terrible year in 2022. The economic environment has been relentless and today’s FOMC meeting adds to the overall crypto angst. The Federal Reserve, headquartered in Washington DC, has begun its two-day monetary policy meeting.

The Federal Open Market Committee (FOMC), the Federal Reserve’s monetary policy governing body, will decide on the next interest rate hike at its current meeting. Analysts predicted the meeting would be a game-changer for the crypto industry.

The Federal Open Market Committee (FOMC) is made up of 12 members. This includes seven governors of the Board of Governors, a president of the Federal Reserve Bank of New York, and four presidents of the remaining 11 reserve banks on a rotating basis.

FOMC Rate Hike Decision Threatens Severe Crypto Market Drop

In 2022, higher FOMC rates have already been felt on stocks, cryptocurrencies, commodities (like oil), and a variety of other assets. But what can investors expect going forward, and how long will the rising rate environment impact markets?

Four times this year the Fed has hiked rates, and it’s easy to see when the markets really realized the central bank was serious business with its monetary policy tightening plans. In November 2021, crypto and many riskier stocks peaked. However, since then, digital assets have mostly trended lower.

Bitcoin, the main cryptocurrency, has fallen around 71% from its November high. Ethereum, the second largest cryptocurrency, is also seeing a significant drop of 68%. However, Ethereum is currently going through what is called a “meltdown”.

The FOMC’s decision to raise interest rates is expected to strongly influence risk class assets. But market experts are split on whether the Fed will go too far or not far enough and whether that has already been reflected in stock and crypto prices. This uncertainty generates increased volatility in the markets.

Cryptocurrency has often been described as a solution to various problems: inflation, low interest rates, lack of purchasing power, devaluation of the dollar, etc. These advantages were easy to buy when the crypto rose, regardless of other assets. However, that narrative has soured in recent months.

On Wednesday, Bitcoin was unstable at around $19,300 after a cryptocurrency selloff that lasted an entire week. Indeed, crypto investors are bracing for the FOMC’s interest rate hike decision later in the afternoon.

Bitcoin analysts are watching to see where the digital asset will trade following the central bank’s key decision. The summer low of $17,708 on June 17 is seen as a key test point.

Major Crypto Coins Plunge

Right now, major cryptocurrencies are going through a tough time in what appears to be a bear market. Bitcoin (BTC) is currently in the lead and has fallen nearly $19,000. As of this writing, BTC is trading at around $19,247. Additionally, Ethereum is trading at 1,321 USD.

Although Ethereum had great success with its technical upgrade, the merger did not have a positive impact on the price of ETH. In fact, the price of Ethereum has fallen over 16% in the past week. The merger put the second-largest crypto back on the SEC’s radar, despite being a technical achievement for the Ethereum protocol.

The other most important coins suffered considerably. Binance Coin (BNB) is down 2.39% in the past 24 hours, according to CoinMarketCap. Solana and Cardano are also lagging behind with significant losses. Over the past 24 hours, the movement of the top 10 cryptocurrencies has been uncertain. The Cryptopolitan team has kept a full watch on each cryptocurrency and classified them accurately.

The upcoming FOMC interest rate decision will have a significant impact on Bitcoin and other major cryptocurrencies. However, most crypto traders are already forecasting a 0.75% increase. Many experts believe that a 75 basis point increase will cause bitcoin prices to surge once it has fully appreciated.

If the FOMC offers less than 100 basis points of increase, it would make sense to see a small relief rally – this could be quite significant if the FOMC were to offer less than 75 basis points of increase, although this seems highly unlikely .

John Toro, head of trading at Independent Reserve

While recent dollar growth could be good news for American executives and businesses, it has had the opposite effect on bitcoin. According to one source, bitcoin is “very sensitive to rate increases”. In other words, as the value of the dollar increases, the value of bitcoins decreases. Since January 1, the dollar has risen 15.78%. The current rate of USD strength has not been seen in the last 20 years.

The Crypto Market Is For A Long Week

The Federal Reserve’s upcoming FOMC rate decision isn’t just affecting the cryptocurrency industry — traders around the world are scrambling to make last-minute moves. The Federal Reserve’s move comes amid an action-packed week on the political front, with the Bank of Japan and Bank of England both due to talk rates on Thursday.

The revisions could trigger big swings in global markets as traders struggle to determine where borrowing rates will go after recent big hikes by the Riksbank and the Bank of Canada.

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