Bitcoin and Ether Prices Decline Before Fed, BoE, and BoJ Interest Rate Decisions
Bitcoin and Ethereum have witnessed notable declines over the past 24 hours, with Bitcoin sliding by 3% and Ethereum dropping by 6%. These drops come at a crucial time as central banks prepare to make significant interest rate decisions. The total market capitalization of cryptocurrencies currently stands at $2.12 trillion, marking a 4.5% decrease within a day.
The market saw a resurgence in volatility as Bitcoin fell to a low of $58,200 before recovering slightly to trade above $58,600, according to data from CoinGecko. This fluctuation has led to conflicting views among market participants regarding the future trajectory of Bitcoin.
As Bitcoin experienced a pullback, altcoins followed suit. Ethereum dipped by as much as 6% to around $2,300, while other altcoins like Solana, Dogecoin, and Ripple also witnessed declines of around 5% each. Among the top 100 crypto assets, Injective, Internet Computer, Pepe, and Ondo recorded the most significant losses, averaging 7%.
The crypto market is bracing for further volatility as the Federal Reserve’s rate decision approaches. Analysts caution that a 25-basis-point rate cut may trigger a “sell-the-news” event, given that the market has already factored in this adjustment. The CME FedWatch tool now indicates a 41% probability of a 25-basis-point cut and a 59% likelihood of a 50-basis-point reduction.
Market sentiment has shifted significantly regarding the Fed’s upcoming interest rate decision. The odds of a 50-basis-point cut have increased, with economists expressing mixed expectations. While some believe that such a move could uplift the crypto market, others warn that an aggressive cut might signal economic challenges, potentially leading to short-term selloffs in risk-on assets.
The Federal Reserve is set to announce its decision on Wednesday, September 18, marking a potential reversal of the tightening cycle initiated in 2022. Additionally, attention is focused on interest rate decisions by the Bank of England and the Bank of Japan, both scheduled for September 19.
The Bank of England’s upcoming decision follows a recent rate cut from 5.25% to 5% in August, marking its first reduction since late 2021. Committee members are closely monitoring inflation levels, indicating a cautious approach to policy adjustments. Similarly, the Bank of Japan, known for its prolonged tightening measures, is expected to announce its interest rate decision on the same day, maintaining negative interest rates and yield curve control measures.
