The Cryptomarkt is currently in anticipation of the crucial interest rate decision of the American Federal Reserve, which will be announced on Wednesday evening.
Bitcoin (BTC) and other cryptos show little movement, which indicates uncertainty among investors. Analysts do not expect a direct interest rate reduction, but the tone of the FED can have major consequences for the cryptomarket.
Why is the FED decision important for crypto?
The Federal Reserve decision usually influences sentiment on risky assets, including cryptocurrencies. Although analysts assume that the interest rate will be maintained for the time being at 4.25%-4.50%, statements by FED chairman Jerome Powell can cause substantial price fluctuations.
Traders of QCP Capital explain:
“A direct interest rate reduction is unlikely. Yet any subtle indication of relaxation (‘Dovish Signal’) can cause a strong reaction to the cryptomarket and lead to a renewed revival.”
Doge and XRP fall more than 2 percent
In the meantime, altcoins such as Dogecoin (Doge) and XRP show clear signs of weakness. Both coins have fallen more than 2% in value in the last day. The wider Coindesk 20 Index (CD20), a indicator for the entire cryptomarket, also fell by approximately 2%.
According to analysts, the reluctance in the cryptomarkt is due to the uncertainty surrounding the FED decision and the general negative sentiment in stock markets. This is partly due to increasing inflation morning and geopolitical tensions.
“Extreme fear” among crypto investors
This sense of uncertainty is further emphasized by Agne Linge van Wefi. She points out that the Crypto Fear & Greed Index is currently at 22, which indicates ‘extreme fear’ among investors. Linge explains:
“Investors are nervous because of the ongoing economic uncertainty, inflation pressure and geopolitical tensions. This can further put Bitcoin and other cryptos under pressure in the coming days.”
Bitcoin at tipping point: correction or new rally?
From a technical point of view, Bitcoin is currently at a crucial point. According to Ryan Leeanalyst at Bitget Research, is the largest crypto coin in a consolidation phase between $ 82,000 and $ 85,000. He sees two possible scenarios for the short term:
“Bitcoin is currently moving between important support levels of $ 82,000 and $ 85,000. This is a classic consolidation phase after a strong rally. If the market sentiment deteriorates due to statements from the FED, BTC can fall towards $ 75,000- $ 80,000. On the other hand, a positive tone can increase quickly to $ 90.” ””
With all eyes focused on the US central bank, the cryptomarkt seems to be trapped in a tension between fear and hope for the time being. It is clear that the FED interest decision will set the tone for the coming weeks.
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Source: https://newsbit.nl/bitcoin-xrp-en-dogecoin-in-spanning-rentebesluit-fed-bepaalt-koers-cryptomarkt/
