Bitcoin and Ethereum Prices Drop 5% Before Federal Reserve Interest Rate Announcement

Bitcoin (BTC) and Ethereum (ETH), the top two cryptocurrencies in terms of market value, saw a decrease of up to 5% prior to the U.S. Federal Reserve’s decision on interest rates set for September 18.

The cryptocurrency market experienced a decline during Asian trading on September 16, with investors closely monitoring the impending interest rate announcement by the U.S. central bank.

Although the downward trend has somewhat stabilized, Bitcoin is currently showing a 2% decrease, trading at $58,750 in the U.S., and Ethereum’s price is down by 3% at $2,300 in the U.S.

This dip in prices occurred just before the anticipated interest rate cut by the U.S. Federal Reserve, which is expected to be the first reduction in over four years.

Market speculators are confident that the central bank will indeed lower rates following its policy meeting on September 18, with the only uncertainty lying in whether it will be a 25 or 50-basis point reduction.

Presently, traders are estimating a 65% probability of a 25-basis point rate decrease by the Federal Reserve, although the likelihood of a more substantial 50-basis point cut has been on the rise in recent days.

At one juncture, Ethereum experienced a drop of as much as 5.5% in the past 24 hours, marking its most significant one-day decline in over a month based on market data.

Experts suggest that the mounting ambiguity surrounding the Federal Reserve’s stance on interest rate cuts is influencing investor sentiment towards riskier assets like cryptocurrencies.

Nevertheless, reduced interest rates are generally viewed as a favorable driver for markets and high-risk assets such as stocks and digital currencies.

Bitcoin has witnessed a 33% surge in price since the beginning of the year, while Ethereum’s price has remained relatively stable, showing a minimal increase of 0.19% for the year.