After the Federal Open Market Committee (FOMC) announced a 75 basis point increase in the US interest rate on Wednesday, the prices in the crypto market rose slightly at first, but this increase did not last and after hours we saw the prices fall again. On Friday, the market situation was bearish and we saw the return of the price of Bitcoin below the level of $19,000 and Ethereum below $1,300.
According to Mihan Blockchain and quoted by CoinDesk, the Federal Reserve’s attempt to reduce inflation in the United States through contractionary policy and interest rate hikes continues to put pressure on risky assets such as digital currencies and does not allow this market to breathe. On Thursday and Friday, we saw the price of cryptocurrencies fall following the increase in US interest rates.
- Bitcoin price (BTC): The 20-day moving average of Bitcoin trading volume fell 4% on Friday. The price was also decreasing and this coin was traded below the $18,600 level at times. At the time of writing, Bitcoin price has returned above $19,000 and is trading at $19,003, representing a 1.2% drop from the previous day. The 24-hour trading volume of Bitcoin is about 38 billion dollars and its dominance is 38.8%. Since the beginning of 2022 (D 1400) so far, the price of Bitcoin has decreased by 61%.
- Ethereum price (ETH): Ethereum trading volume is 3% below its 20-day moving average. At the time of writing, Ethereum is trading at $1,317. The week-to-week (WoW) price change shows a 12% drop in Ether price. Since the beginning of 2022, the price of Ethereum has experienced a 65% drop. The price of ETH has also dropped by 20% since September 15 (September 24), when the Ethereum platform was updated. Ether supply has increased to 5,400 units after Marj. It is estimated that the supply of Ether would probably have increased by more than 105,000 Ether if the Ethereum meltdown had not occurred. It was expected that the decrease in the supply of ether would increase its price, but this has not happened yet.
- Status of altcoins: The situation of major altcoins in the market is also not encouraging. Ripple (XRP), which was among the few major cryptocurrencies that were bullish on Thursday, faced a drop in price on Friday. At the time of writing, Ripple is down more than 8% to $0.4935. MemeCoin Dogecoin was also among the most positive major cryptocurrencies in the crypto market with a 6.57% growth in the last 24 hours.
- US stocks: Indicators in the traditional stock market were also down. The Dow Jones Industrial Average (DJIA) fell 480 points, down 1.6% to its lowest level of the year. The Nasdaq and S&P 500 both fell about 2%.
- Dollar Index (DXY): The dollar index (DXY) fared better, rising 1.18% to 113.23, a 20-year high.
It seems that Bitcoin and Ethereum need a strong catalyst and stimulus for their growth. Risky assets, including cryptocurrencies, will continue to come under pressure as the Federal Reserve attempts to curb inflation by raising interest rates and reducing the size of its $8 trillion balance sheet. With the increase in interest rates, holding the US dollar becomes more attractive due to the increase in yield, and this prevents the conversion of dollars into cryptocurrencies and increases the demand for cryptocurrencies. This is why it is said that there is a negative correlation between Bitcoin and the dollar.
You can see the status of the major cryptocurrencies in the crypto market in the image below, which was prepared from the blockchain’s price data.