Bitcoin and Ethereum tanked sharply in the early morning hours as the markets opened ahead of the Federal Reserve’s policy meeting on Sept. 20-21. The drop further exacerbates BTC and ETH’s recent downturns, with both losing more than 50% over the past six months.
Global Market Cap Down at $942B As Crypto Takes Another Fall
Bitcoin (BTC) and Ethereum (ETH) lost over 50% of their value in the past six months as risk assets continue to deteriorate, showing no signs of notable recovery yet. The crypto pair has taken another fall Monday morning as markets brace for the Federal Open Market Committee (FOMC) tomorrow.
BTC and ETH are down 8% and 10.8% in the past 24 hours, respectively. The global crypto market cap is down more than 7% at $942 billion, according to CoinGecko.
The latest drop in cryptocurrencies comes as macroeconomic conditions remain challenging, pushing investors away from risk assets such as crypto and the stock market. Even though inflation in the U.S. slightly eased in August, it still remains too far from the Fed’s 2% target and continues to weigh on consumers’ pockets.
According to the last Consumer Price Index (CPI) print, inflation rose more than expected last month as a surge in food and shelter costs offset the recent drop in gas prices. CPI rose 0.1% on a monthly basis and 8.3% year-over-year last month, down from 8.5% in July.
“Today’s CPI reading is a stark reminder of the long road we have until inflation is back down to earth. Wishful expectations that we are on a downward trajectory and the Fed will lay off the gas may have been a bit premature.
Fed Very Likely to Deliver a Third Straight 75 bps Hike
All things considered, today’s crypto market descent likely comes due to the FOMC meeting tomorrow, when the U.S. central bank is expected to impose a third consecutive 75 basis points (bps) interest rate hike. Some analysts expected the Fed to slow the pace of rate hikes this month, but after the latest CPI print, it is more likely that the Fed will remain aggressive in its fight against inflation.
More than 60% of economists now predict a 75 bps rate hike tomorrow, up from just 20% who said so last month. A third consecutive 75 bps rate increase would take the Fed’s policy rate to the 3.00%-3.25% target range, the highest since the 2008 global financial crisis.
Elsewhere, the European Central Bank (ECB) is also considering raising interest rates after inflation in the eurozone hit a new high of 9.1% in August, the highest in 23 years. The ECB promised further interest hikes in the future, even though the bloc is likely to fall into a recession this winter.
This article originally appeared on The Tokenist
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