Ethereum
Bitcoin drops to $57,000 and Ethereum drops below $3,000 hours before Fed meeting
In the hours leading up to the next Federal Reserve meeting, investor pessimism was felt. Bitcoin And Ethereum hard.
At the time of writing, BTC has fallen by 7.6% and ETH by 6% in the last 24 hours. THE Bitcoin Price hovers around $57,000, while the Ethereum Price is stuck at just under $2,900, according to data from CoinGecko.
The volatility has been hellish for derivatives traders. Over the past 24 hours, $457 million worth of crypto futures positions were liquidated, according to CoinGlass. And that’s no big surprise: $392 million were long-term contracts.
Traders who open futures contracts are essentially betting on future price movements. Being long an asset means betting that the price will increase. And being short of money is betting that it will go down.
And it’s not just blue chips like Bitcoin and Ethereum that have been affected. The drop in prices was widespread throughout the market. In fact, among the top 100 cryptocurrencies by market cap on CoinGecko, only a few assets escaped the red sea, except for stablecoins that managed to maintain their footing, like Tether (USDT) and USDC from Circle.
The U.S. Federal Open Markets Committee will release its interest rate decision at 2 p.m. Eastern today, and Fed Chairman Jerome Powell is expected to speak at a news conference at 2:30 p.m. In February, investors seemed certain that May would be the month when the FOMC finally cut interest rates, which is typically a bullish sign for risky assets like Bitcoin.
That’s because falling interest rates typically prompt traders to exit U.S. Treasuries to seek gains in riskier assets, like stocks and crypto assets.
The Fed’s key interest rate is currently between 5.25% and 5.5% and has remained unchanged since July 2023 while the central bank aims to curb inflation. Policymakers are closely monitoring inflation, which is currently 3.5%, hoping to bring it closer to 2% before considering rate cuts. But that’s becoming a distant hope as inflation last month hit its highest level since September.
Traders got a small boost of hope in March, when the Swiss Central Bank announced that it would reduce interest rates. “For several months, inflation has returned below 2% and is therefore within the range that the SNB equates with price stability,” writes the central bank in its report. decision at the time. But it appears that the sentiment in Switzerland has not extended to other major central banks.
Just a month ago, traders seemed certain the Fed might cut interest rates in June, according to the CME Fed Watch tool. But the feeling deteriorated. Traders don’t expect the Fed to cut interest rates until December – and even then, only a 75% majority appears to agree.