Bitcoin is down 3.52% and rolled to the $22,000 mark. This has had an impact on the broader cryptocurrency market. Ether, the second-most popular crypto, lost 3.84% of its value. It was trading at $1,572. The altcoins are also rolling in the red. Polygon MATIC lost 5.43% in the last 24 hours. Solana 5.38%, Cardano 5.19%, Polkadot 4.92% and Avalanche 4.48%.
The downturn in the market comes ahead of the US Federal Reserve’s Wednesday announcement. It is expected to raise interest rates. Analysts believe the crypto market is following US equities and stocks that have also been hit hard. Data shows that the S&P500 is down by 45 points and Nasdaq lost 198 points.
Investors are apprehensive about the upcoming FOMC decision on interest rates. The US department of justice levied enforcement action against Bitzlato after January 18. Crypto and stock prices, after initially benefitting from Consumer Price Index (CPI), began to cool as retail data missed expectations and earnings diminished.
The US Bank data stated that inflation, interest rates and earnings remain key to equity returns. Inflation, at present, remains elevated. Moreover, interest rates are rising and consensus earnings projections for 2023 are trending lower. Edward Moya, senior market analyst at Oanda, said Bitcoin is declining as Wall Street becomes defensive. Traders expect the US Federal Reserve to raise interest rates by 25 basis points at its Federal Open Market Committee (FOMC) meeting.
Moya highlighted that Bitcoin’s recent resistance below $24,000 underscores this concern. He believes that inflation risks need to go away for crypto to have any underlying support amid all the regulatory and contagion fears.