- June 16, 2023
- Posted by: [email protected]
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Following the Federal Reserve’s announcement of a probable restart of interest-rate hikes, cryptocurrency values fell significantly across the entire market. The Fed’s decision to stop its tightening cycle, followed by the possibility of rate hikes, sent shockwaves across numerous risk assets, resulting in a decline in the cryptocurrency market.
Stephane Ouellette, CEO of FRNT Financial, an institutional platform focused on digital assets, noted that the market’s reaction aligned closely with other risk assets, signaling a perception of a marginally more hawkish stance from the Fed. This interpretation prompted some speculators to make short-term trades based on potential breakouts around such events. As these trades were unwound, a sell-off occurred, leading to the subsequent decline in prices.
Bitcoin, which accounts for about half of the total value of the $1 trillion crypto market, fell for the third day in a row, challenging the $25,000 price level. Ethereum, the second-largest cryptocurrency, fell around 4.6%, while altcoins such as XRP and Litecoin fell approximately 8% and 6%, respectively.
From a technical perspective, Bitcoin’s prolonged decline threatens the 2023 uptrend line, with Ouellette indicating significant resistance around the $30,000 to $31,000 level.
Although the Federal Reserve paused its interest-rate hikes after 15 months, its indication of a future resumption to combat inflationary pressures contributed to downward pressure in the cryptocurrency market. Traders who had previously taken long positions, anticipating the outcome of the Federal Open Market Committee (FOMC) announcement, appeared to be selling after the news became public.
Darius Tabatabai, co-founder of the decentralized exchange Vertex Protocol, suggested that the market’s downward pressure was a result of traders who had bought into the rumor prior to the FOMC announcement and were now reacting to the actual news.
As the market continues to digest the implications of the Federal Reserve’s statements and potential rate hikes, it’s essential for investors to closely monitor the evolving situation and adapt their strategies accordingly.
