By James Davis
The drop in Bitcoin prices on Tuesday morning saw other digital assets follow suit as traders looked to de-risk ahead of Fed’s announcement set for Wednesday. It is expected that the central bank will continue to increase interest rates this year.
As of this writing, Bitcoin, the most famous digital asset, is changing hands for $22.807, representing a drop of about 3.8% in the past 24 hours. Moreover, the second largest crypto by market cap, Ethereum, has shed over 7% of its value and is currently trading at $1,545, as per CoinGecko.
Solana is one of the top 20 cryptocurrencies that has seen a massive drop in the past 24 hours. The token’s value is down 11% and is currently priced at $23.54. Additionally, data from CoinGecko shows that its 24-hour trading volume has dropped by 5.6%, and it is sitting at $1,054,787,675 today.
Most crypto traders are looking to sell their bag of risky assets before the Fed’s announcement. Many anticipate that the US agency will go forward with its stringent monetary policy aiming to put inflation under control in the country.
Fed Rate Hikes in 2022
Last year, the Fed increased the interest rates about seven times. As a result, risky assets (assets that tend to be highly volatile, like Bitcoin) became unattractive, and many investors shifted to greenbacks. That said, the USD recorded gains on Tuesday as the USD index rose by 0.33%.
The US central bank began last year on an aggressive note raising the interest rates four times by 75 basis points. It then went slow by hiking the rates by 50 basis points. Several market analysts have come out claiming that they expect a smaller hike of about 25 basis points this time around.
Could This be the Start of the BTC Downward Movement?
Meanwhile, Bitcoin has had a good run since the start of the year. The coin has been in green for most part of January. According to CoinGecko, BTC is up 38% in the past 30 days and has gained about 10% in the past 14 days alone. However, its trading volume has dropped by 2% in the past day and sits at $38,456,755,543.
A group of crypto analysts has labeled the recent upward movement in most cryptocurrencies as a bull trap claiming that it could hurt investors who mistook it as the start of a bull run.