Currently, the flagship cryptocurrency is trading below $21,000, at $20,955, down 4.26% on the day and a further 7.17% across the last week, according to CoinMarketCap data retrieved by Finbold. As a result, the digital asset’s entire market value is now sitting at $400.13 billion, the last time BTC had a market cap of this size was on July 18—more than a week ago. The decline has dampened hopes for a lasting Bitcoin recovery and reverted the token to a trading range of between $19,000 to $22,000. The anticipated 75-basis-point Fed rate hike on Wednesday, July 27, is part of a tightening cycle squeezing liquidity; consequently, investors’ appetite for risk appears to be on the wane.
Fed hike may already be priced into the market
Interestingly, crypto consultancy platform Eight Global is more optimistic about the Federal Open Market Committee (FOMC) meeting on July 27. The platform noted the federal funds rate is important for crypto since: Moreover, Eight Global stated an increase of 75 basis points is expected by the majority and is the most likely outcome, but this is already priced into the market. Meanwhile, crypto trading expert Michaël van de Poppe opined with the markets correcting he is “looking at a $20.5K-20.7K area to hold for Bitcoin going into FOMC tomorrow”.
Market instability
As a result of the instability, regulatory control of the sector is becoming more strict. Coinbase, for example, is facing an investigation in the United States into whether it wrongly allowed Americans to trade digital assets that should have been registered as securities. The background of global issues, with Russia limiting gas supplies to Europe and increasing food prices generating fears about destabilization in emerging economies, adds to the uncertainty over the route that crypto assets may take. Finally, another barrier for digital tokens comes from this year’s performance of the US dollar relative to other major developed-market currencies. Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
