Bitcoin stock (BTC-USD) plummeted on Monday, and other cryptocurrencies followed suit as the Federal Reserve is likely to raise interest rates for the third time when it meets this week. It might be preparing to make a huge move.
The Bitcoin Stock Drop and Its Effect on Other Cryptocurrencies
According to CoinDesk, Bitcoin stock (BTC-USD) has dropped to $19,089, a 6.1% drop in the last 24 hours. This year, the world’s biggest cryptocurrency has dropped over 60%. It recovered from previous lows when Bitcoin stock (BTC-USD) traded at levels last seen in December 2020.
The second-largest cryptocurrency, ether, has dropped more than 6% in the last 24 hours to $1,343. Last week, the Ethereum blockchain network’s native token, known as “The Merge,” completed its long-awaited update. However, the upgrading has been overshadowed by macroeconomic issues such as increasing concerns about inflation and the possibility of a recession.
According to Edward Moya, senior market analyst at Oanda, the White House’s disclosure last week of the Biden administration’s intentions to regulate the sector added to the uneasiness around cryptos.
“Bitcoin stock (BTC-USD) is lower following the selloff in equities as risk appetite remains in hiding,” Moya said last week, as equities fell following hotter-than-expected inflation data, an earnings warning from FedEx (ticker:FDX), and Wall Street’s expectation that the Fed will raise interest rates by 75 basis points for the third consecutive policy meeting in an effort to tame inflation. The Fed’s rate decision is due Wednesday afternoon.
Bitcoin stock (BTC-USD) has done nothing in the last three months. It has traded as low as $18,271 and as high as $25,212 since mid-June but has remained relatively rangebound. Open interest in Bitcoin futures has increased by 20% in the last three months, according to Rick Bensignor of Bensignor Investment Strategies, despite the cryptocurrency doing virtually little in that time. “That suggests a major relocation is in the pipeline,” he added.
On Monday, cryptocurrency-related equities fell in tandem with Bitcoin stock (BTC-USD). Coinbase (NASDAQ:COIN) plummeted 4.7%, Marathon Digital (NASDAQ:MARA) down 1.5%, and Riot Blockchain (NASDAQ:RIOT) dropped 1.2%.
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