Crypto market have experienced a significant downturn following regulatory actions and uncertainties stemming from the latest Federal Reserve notes.
Crypto Market Continues To fall After Fed’s Notes
The cryptocurrency markets have experienced a significant downturn following regulatory actions and uncertainties stemming from the latest Federal Reserve notes.
Cardano (ADA) emerged as the largest loser within the top ten cryptocurrencies, plummeting 22% over the past week, with a further 7% decline in the last 24 hours, according to CoinGecko. Other major cryptocurrencies, including Binance’s BNB token, XRP, and Dogecoin, also faced notable losses, down 10.3%, 9.1%, and 9.5%, respectively.
Bitcoin (BTC) dropped below the $25,000 mark, trading 4% lower at $24,900 on Wednesday morning. The leading digital asset experienced a 6% decline over the week.
CoinGecko data reveals that the total crypto market capitalization shrank by approximately $40 billion or 4.2% within the last 24 hours. Ethereum (ETH) also experienced a significant drop of 6.4%, reaching a three-month low of around $1,630. On a weekly basis, ETH has declined by more than 11.3%.
The wider crypto market is currently engulfed in a bearish trend, largely influenced by uncertainties surrounding the U.S. Federal Reserve’s position on interest rate hikes.
Following the Federal Open Market Committee (FOMC) meeting, the market initially showed a muted reaction to the Fed’s decision, trading sideways.
However, the downturn intensified on Thursday morning. The U.S. central bank opted to maintain the interest rate, keeping its benchmark rate unchanged. However, it hinted at the possibility of several rate hikes by the end of the year.
Higher interest rates can raise borrowing costs, hampering wage and business growth. Additionally, increased rates on bank deposits and government bonds can make stocks and cryptocurrencies less attractive to investors.
The 0.17% rise in the dollar index (DXY) against other currencies after the FOMC meeting further solidifies the influence of the Fed’s decision on market prices.
The U.S. stock market also reacted negatively to the Fed’s uncertain stance, initially causing a drop in the S&P 500 and Nasdaq 100 indices. However, both indices managed to recover from their intraday losses, with the S&P closing the day 0.08% higher and Nasdaq gaining 0.86%.
As regulatory actions and central bank uncertainties continue to weigh on the crypto market, investors remain cautious about the future direction of digital assets and their performance amid these challenging circumstances.
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