The king of cryptocurrencies has dropped below $27,500 again, and selling pressure has intensified in some altcoins. The latest data is not good. Investors who are concerned about the Federal Reserve’s further interest rate hikes continue to reduce their risks. US stock markets also fell (in pre-market trading).
Why Are Cryptocurrencies Falling?
We have been saying for a long time that today’s upcoming data will trigger volatility in the markets. And it did. The Non-Farm Payrolls data, which came in above expectations, highlights the strong stance on the employment front despite the positive ADP. Fortunately, wage increases came as expected, and we are currently far from the worst-case scenario.
The decline in the king cryptocurrency continues at the time of writing this article. If the losses do not stop at the $27,000 level, they could continue down to the $26,800 and $26,500 support levels. The RSI on the 15-minute candle has reached oversold levels, yet BTC continues to fall.
Federal Reserve Chairman Powell had mentioned that they could further increase interest rates if there is no easing on the employment front. Fed officials speaking this week also warned that further tightening may be needed.
November 1st Fed Meeting
Expectations for an interest rate hike for the upcoming meeting were in the teens last week. However, when we check FedWatch now, we see that this rate has increased to 30%. Expectations for the December 13th meeting have also increased by 37.6%. The rate is in the 37% range for the January meeting as well. All of this tells us that 2024 may not be as great as we hoped.
If the Fed wants to emphasize its determination in the tough fight against inflation, it can make 2 interest rate hikes instead of 1. Moreover, since interest rate cuts for 2024 have been postponed to September, tightening will be even more troublesome for the risk markets. Expectations for total cuts for next year have fallen to the 50bp level.
US stock markets (in pre-market trading) experienced losses of over 1% within minutes. On the other hand, the US dollar index DXY continues to trade within the rising parallel channel. Just as the index was about to close below 106.2, we saw it reach the 107 level with today’s data.
If the DXY surpasses the 107.11 level after the last support test, it can be seen that the rise will continue towards 110. This means more losses for cryptocurrencies. Considering the negativity in the BTC chart, cryptocurrency investors now need good news that can differentiate them from the general market. Otherwise, October may end with a decline for the first time in years.
