What happened ?
Sales of crypto today counteracted much of the positive sentiment we have seen materializing in this sector over the past few weeks. As of 12:30 p.m. EST, major cryptocurrencies Bitcoin (BTC 1.37%), Ethereum (ETH 3.88%) and Dogecoin (DOGE 2.24%) were down 5.1%, 9% respectively. .7% and 6.8% in the last 24 hours.
This abrupt shift in sentiment appears to be tied to the dissipation of hype surrounding 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 the Coinbase market: Will the price of ZRX soon increase by 100 times?.
This move in the cryptocurrency market was mirrored by equity markets, which are also down substantially today as investors await the Federal Reserve’s decision on 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 will take the overnight federal funds rate above 2% for the first times since the pre-pandemic era.
Bitcoin liquidations surged on the news as trading volumes remained very high.
So what ?
In recent weeks, Ethereum has been one of the most volatile large-cap tokens in the market. Consequently, its exceptional decline today must be put into perspective. This may interest you: The first European ETF to be launched by Grayscale.
After all, this is a token that has grown significantly lately, 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 make short-term gains.
Broad macro concerns appear to warrant a cautious approach by growth investors as risky assets are repriced. Some analysts have raised the possibility of a longer-lasting bear market for equities 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 being discussed among investors, leading to excessive volatility as price discovery unfolds.
The overall cryptocurrency market continues to hover just a little above the psychologically important threshold of $1 trillion in market capitalization. As a result, crypto investors fear that traders will be incentivized 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 could become the norm as investors push and pull on this seemingly critical level.
Also, it will be interesting to see how the cryptocurrency market reacts to the Fed’s decision this week. Whether this rate hike is greeted with relief or pessimism, it’s something many will be interested in seeing.
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 vigilant and consult your financial adviser before making any investment decision. Mirror-Mag cannot be held responsible in the event of bad investments. Before using any third-party service, you should do your own research.