What happened ?
The sale of crypto today countered much of the positive sentiment we’ve seen materialize in this sector over the past few weeks. From As of 12:30 PM EST, major cryptocurrencies Bitcoin (BTC 1.37%), Ethereum (ETH 3.88%) and Dogecoin (DOGE 2.24%) were down 5.1%, 9%, 0.7% and 6.8% within the last 24 hours.
This abrupt shift in sentiment appears to be tied to the spread of hype around Ethereum’s upcoming merger, which has driven a significant portion of the sector’s gains over the past few weeks. This may interest you: ZRX Boosts Coinbase Market: Will ZRX Price Increase 100x Soon?.
This move in the cryptocurrency market was mirrored by the stock markets, which are also significantly lower today as investors await the Federal Reserve’s decision on the upcoming interest rate policy. This week, the Federal Open Market Committee is expected to announce a rate hike of 75 basis points (0.75%), which would bring the federal funds rate above 2% for the first time since the pre-pandemic era.
Bitcoin liquidations surged on the news as trading volume remained very high.
So what ?
In recent weeks, Ethereum has been one of the most volatile tokens with large companies on the market. Therefore, its unusual decline today must be put into perspective. This may interest you: The first European ETF launched by Grayscale.
After all, it is a token that has grown significantly recently in anticipation of the network’s upcoming merger. So on down days like today, it makes sense to see higher selling interest materialize as investors take profits and realize short-term gains.
Broad macro concerns appear to warrant a cautious approach from growth investors as risky assets are repriced. Some analysts have raised the possibility of a prolonged bear market for stocks as an incentive for investors to steer clear of riskier asset classes such as cryptocurrencies. Whether or not such a prolonged bear market is in sight is still debated among investors, leading to excessive volatility as price discovery unfolds.
The overall cryptocurrency market continues to hover slightly above the psychologically important threshold of $1 trillion in market capitalization. As a result, crypto investors fear that traders will be encouraged to hit the sell button if we slip back into 12-digit territory. This may interest you: 2 good reasons to buy Ethereum now, and 1 reason to wait. In the coming weeks, greater volatility may become the norm as investors push and pull at this seemingly critical level.
It will also be interesting to see how the cryptocurrency market reacts to the Fed’s decision this week. Whether this rate hike is met with relief or pessimism, it is something many will be interested to see.
For long-term investors in these top cryptocurrencies, the next few days and weeks look set to be exciting (for lack of a better word).
Be cautious and consult your financial advisor before making any investment decision. Mirror-Mag cannot be held responsible in case of bad investments. Before using a third-party service, you should do your own research.