The decline in the cryptocurrency market continues. In line with this, the anticipation of investors remains anxious before the interest rate decision, as the fall in Bitcoin and other major cryptocurrencies continues. Meanwhile, investors have been cautiously eyeing economic indicators and the upcoming Federal Reserve meeting, which could have potentially contributed to this decline.
Let’s examine the potential factors that may have triggered the sell-offs in the cryptocurrency market.
As the Federal Reserve’s decision approaches, investors continue to act cautiously following the announcement of the U.S. Consumer Price Index (CPI) data, which showed a 3.1% inflation rate in November. Meanwhile, the latest data revealed that monthly inflation increased by 0.1%. Additionally, the core CPI rose by 4% on an annual basis.
Despite the downturn, inflation remaining above the Federal Reserve’s 2% target has led to increasing expectations before today’s meeting. The CME FedWatch tool indicates a 98.2% chance that the Fed will not change the interest rate at its upcoming meeting, suggesting that investors may wait a bit longer before making transactions. Moreover, any potential interest rate cuts by the central bank are another topic eagerly awaited by the market.
Profit-taking and economic conditions are other possible factors that could have triggered the recent downturn in the market. Investors cashing in on their short-term gains and high profits from the crypto market could have been a catalyst. Particularly Bitcoin, Ethereum, and other major cryptocurrencies in terms of volume had reached their highest levels of the year last week due to low risks when no negativity was present in the market.
Furthermore, investors seem to be looking for clarity on the health of the U.S. economy with the upcoming announcement of the U.S. Producer Price Index (PPI) data later today. This significant economic indicator for the markets could cause investors to question their crypto transactions and also affect market sentiment.
In the uncertain economic environment before the FED meeting, investors appear to be closely monitoring these developments.
The latest price movements in the global crypto market have shown that charts have continued to stay in the negative territory throughout the week and are still doing so. Moreover, the global crypto market cap has fallen by 1.71% to $1.54 trillion, with the total market volume experiencing an 11.94% decrease to $70.76 billion.
Particularly, the collapse following the wonderful weeks in the crypto space could be attributed to the declines in BTC, ETH, SOL, and other major cryptocurrencies. At the time of writing, the price of Bitcoin has fallen by 1.12% to $41,030.94, while ETH has dropped to a level of $2,170 with a decline rate of 1.40%. Additionally, the price of XRP has fallen by 2.36% to $0.6064.
