Altcoins lead crypto market decline ahead of FOMC interest rate decision

Quick Take

  • Bitcoin was trading at $20,439 and ether was down to $1,552.
  • Altcoins like SOL and MATIC saw declines of around 5%.
  • The FOMC will deliver its latest interest rate decision today, with a hike of 75 basis points expected.

Crypto markets are bracing for the Federal Reserve's latest interest rate decision.

Bitcoin was trading at $20,412 — a decline of around 0.7% over the past 24 hours, according to data via CoinGecko. Meanwhile, ether dropped 2.8% to $1,549. 

Altcoins were also down — some more significantly than the leading pair. Binance's BNB lost 1.6%, while Solana's SOL and Polygon's MATIC both lost more than 5%. Additionally, Cardano's ADA shed 4.1%. Dogecoin also surrendered some of its gains, trading at a 9% loss.

Macro matters

All eyes are on the U.S. Federal Reserve's interest rate decision later today. The consensus is that a hike of 75 basis points is incoming. However, speculators are watching with bated breath for any signs of a potential pivot before the end of the year. 

The odds of the Federal Open Market Committee increasing rates by 75 or 50 basis points at the meeting on Dec. 14 appear to be evenly split, according to the CME's FedWatch tool.

Any indication from the Fed that it is looking to stay aggressive could trigger a sell-off in markets, according to Ledn's Mauricio Di Bartolomeo. "If the Fed signals it will be more 'data dependent' going into December, markets could interpret that as a higher probability of a smaller hike in December, which could lead to markets getting bid higher," they noted

The shifting expectations in markets towards a dovish outcome are cause for concern, QCP Capital's weekly update claimed. "We are concerned about a negative market reaction to persistent hawkishness from the Fed," it states.

Elsewhere, bitcoin's correlation to equities has begun to tick higher ahead of today's interest-rate decision. The correlation between cryptocurrencies and equities fell over the past few weeks. 

 

U.S. inflation data comes out in a week. QCP Capital expects volatility to pick up between today's decision and this data point next week. 

Meanwhile, Robinhood delivers earnings after the close today. Following a poor second quarter, where the retail investing app made cost-cutting measures, investors will be looking for signs of improvement. 


© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.