Bitcoin price dropped to $65,600, and the anticipated profit sales took place. So, what was the reason for the decline? Initially, it was expected that Bitcoin investors would trigger a drop of about 5% at some point after reaching high profitability. However, there are also macroeconomic factors that contributed to these losses.
Why Are Cryptocurrencies Falling?
The yield on the US 2-year Treasury note reached a three-month peak on March 15, triggering sell-offs in risk markets. Following the bond yield reaching 4.73%, we saw an increased demand for this less risky asset. Investors are reducing their risks, and fixed income is becoming attractive again. Essentially, this is due to the growing acceptance that this year’s interest rate cuts will not be as optimistic as previously thought.
The US Federal Reserve (Fed) will announce its interest rate decision at the meeting on March 20. A few months ago, according to FedWatch data, the probability of a cut was over 70%. However, after recent data, this probability has rapidly approached zero.
CPI and PPI data seem to be forcing the Fed to maintain interest rates at 5.25% for longer than initially expected. Thierry Wizman, a global foreign exchange and rate strategist at Macquarie, said;
“I think the other issue here is not just 2024 and 2025, but also other concerns that the Fed is considering, including the market being very frothy.”
Fed members say that the optimistic scenario could happen if there is a significant relaxation in employment, while signs of inflation reversing indicate that pressure could increase in the coming period. How much cryptocurrencies can positively diverge in the process, with strong ETF demand and halving motivation, remains a question.
What Will Be Solana’s (SOL) Price?
Solana has been on a strong uptrend in the past few days, and if BTC had not experienced this drop, perhaps we could have seen $200 over the weekend. The strong hype from meme coins continues. This is causing people to demand more SOL Coin. In the last 24 hours, SOL Coin reached $188.98, almost hitting the long-anticipated $200 threshold.
At this stage, there are two scenarios. Either SOL Coin loses the $178 level and starts a deep correction towards $142. Or it reaches the $205 target, then the expected correction begins, and we see a move towards the ultimate goal of $126. With the Fed meeting next week, the likelihood of excitement waning seems more dominant.
