Volatility in the cryptocurrency market has spiked over the last few days as traders grow anxious about the soon-to-be-released US inflation data and the Federal Reserve’s decision on interest rates.
Wednesday is a crucial day for financial markets as multiple macroeconomic events occur. The Consumer Price Index (CPI) news, the Federal Open Market Committee (FOMC) meeting, and the Fed’s decision on interest rates are all market movers.
These events are driving wild price swings in the crypto market. Over $180M has been liquidated in the last 24 hours, according to Coinglass.
Crypto Prices Correct Ahead of CPI Data And FOMC Rate Decision
The volatility in the crypto market in the last 24 hours saw Bitcoin (BTC) drop from around $69,500 on June 11 to below $67K. Bitcoin has since recovered slightly to trade at $67,478 as of 05:53 a.m. EST. However, volumes remain down by 7% to $28 billion.
A similar bearish momentum has also been seen in altcoins. Ether (ETH) dropped to a three-week low of $3,448 on June 11.
BNB (BNB) and Solana (SOL) have been down by double-digit percentages in the last seven days. The rest of the top ten altcoins are also trading in the red.
Meme coins have also not been spared from the recent bloodbath. Data from CoinGecko shows the total meme coin market cap is down 2.8% to $59 billion.
According to crypto analyst Michael van de Poppe, altcoins could bottom today, after which a price turn-around will occur, as seen in previous FOMC meetings.
“It seems likely that a repricing back upwards is going to take place starting this afternoon back upwards. It might even be the case that Bitcoin is attacking an all-time high in the coming weeks if there’s a dovish stance from the FOMC,” the analyst said.
Other analysts believe the volatile market conditions call for cautious trading as the market has yet to digest May’s CPI data and the results of the FOMC meeting.
Warren Wants Rate Cuts, but Market Remains Pessimistic
Massachusetts Senator Elizabeth Warren has urged the Federal Reserve to trim interest rates to prevent further hikes in the cost of housing and insurance.
In a letter sent to the Federal Reserve on Monday, Warren, alongside two other Democratic Senators, argued that the Fed’s hawkish monetary policy was not helping to reduce inflation. Instead, it increased the possibility of a recession and could spike unemployment.
However, markets remain pessimistic about a rate cut at today’s meeting. Data from the CME FedWatch Tool shows that 99% of investors believe the Fed will leave interest rates unchanged at 5.25% – 5.5%.
The uncertainty comes as analysts anticipate that the core CPI data for May 2024 will depict a 3.5% year-over-year increase.
If the Fed leaves the rates unchanged, it could lead to a short-term rally in crypto prices. Conversely, a rate cut could increase investor appetite for risk assets such as crypto, which could be the onset of another bull market.
