Following the announcement from the Federal Reserve, the cryptocurrency market experienced a sudden drop. Bitcoin, the leading digital currency, plummeted to as low as $24,879 according to Coingecko. Ethereum, the second-largest cryptocurrency, also suffered a decline of 5%. Unlike previous altcoin crashes, this time Bitcoin and Ethereum were the primary decliners
Federal Reserve’s Decision Raises Concerns and Uncertainty
The Federal Reserve’s decision to pause interest rate hikes has raised concerns and uncertainty among investors. The market had anticipated further rate increases, but the Fed’s decision indicates a cautious approach towards monetary policy. Some experts believe that if the economy and inflation do not cool down further, the Fed may resume rate hikes in the near future. The Wall Street Journal reported that many analysts have penciled in two more rate increases for this year if certain conditions are not met.
Impact of Interest Rates on Cryptocurrencies
Interest rates have a significant impact on various asset classes, including cryptocurrencies. Changes in interest rates can affect investor sentiment, borrowing costs, and overall market dynamics. When interest rates are low, investors often seek higher-yielding investments like cryptocurrencies. Conversely, rising interest rates can lead to a shift in investment preferences, potentially affecting the demand for cryptocurrencies.
Cryptocurrency Market Volatility and Altcoin Crash
The recent drop in the cryptocurrency market highlights its inherent volatility and susceptibility to sudden price swings. Altcoins, referring to cryptocurrencies other than Bitcoin, have also experienced significant price fluctuations. While Bitcoin and Ethereum were the primary decliners during this market dip, other altcoins like CRV also saw notable declines.
