Fed fever hits crypto, What’s next for the market?

Global Crypto Market Faces Correction Ahead of US Economic Data Release

The digital asset market witnessed a widespread decline, with all eyes on the US Federal Reserve's upcoming announcements. The cumulative crypto market capitalization fell by over 3%, reaching $2.03 trillion, while 24-hour trading volume surged by 42%.

Major Cryptocurrencies See Declines

Bitcoin (BTC) tumbled by 3% to trade below $59,000, reversing its recent recovery. Ether (ETH), the second-largest cryptocurrency, lost 6%, extending its downward trend. Dogecoin (DOGE) and Shiba Inu (SHIB) also dropped by approximately 4% each.

Fed Week Nears

Markets anxiously anticipate a crucial economic week that will feature the release of August retail sales data on September 17th. On September 18th, the Fed will announce its interest rate decision and hold a press conference.

The Philadelphia Fed Manufacturing Index and August existing home sales data are also expected later in the week.

Uncertainty Surrounding Fed Rate Cut

Investors are divided on the size of the Fed's anticipated rate cut, with some expecting 25 basis points and others advocating for 50 basis points. Despite a recent decline in inflation, core inflation remains higher than expected.

Fed Officials Cautious

Fed officials generally favor a cautious approach with a 25 basis point cut to mitigate inflationary pressures. However, recent labor market weakness may suggest the Fed is lagging behind. Companies are pushing for a more aggressive 50 basis point reduction.

Crypto Market Reacts

The upcoming Fed decision is expected to impact markets across the board, including crypto. BTC fell below $59K on Monday as it struggled to maintain the $60K level. Over the past 24 hours, BTC has declined by 3%, although it has gained 7% over the past week.

Market Sentiment and Altcoin Losses

The crypto market is currently experiencing negative sentiment, with Solana (SOL) and Cardano (ADA) among the altcoins to decline by over 4% in the last 24 hours.