Crypto prices crash because of what’s coming on Wednesday

The week has ended with the bulk of the cryptocurrency market trading in the red, which is largely attributed to the upcoming US Federal Reserve rate hike announcement.

According to a report from Yahoo Finance, Fed officials are expected to deliver a third straight 75 basis point hike to the benchmark interest rate during the two-day meeting that ends on Wednesday.

Investors across both the crypto market and traditional stock markets are bracing for the impact of the announcement. This is especially so as higher than expected inflation numbers in August (an 8.3% YOY increase in the consumer price index -C PI) triggered more pessimism about the Fed rate hike.

Data from CryptoRank, a cryptocurrency price data aggregator, shows that all of the top 10 cryptocurrencies by market capitalization have fallen between six to 11% in price over the past 24 hours. Bitcoin (BTC), the market leader, fell around 8% to trade at around $18,400.

Similarly, the second largest crypto, Ether (ETH), fell 11% on the day to currently trade at around $1,290. The current ETH price is also a 26.1% reduction from the one-month high price of around $1,800 it reached in the week before the Ethereum blockchain merger event.

Meanwhile, BNB, XRP, ADA, SOL and DOGE are down 7%, 11%, 10%, 8% and 8.5% respectively on the day per data at time of writing.

Analysts still hope for Bitcoin

Despite the turbulent market action, analysts have not given up on the notion that Bitcoin is forming a bottom. DrProfitCrypto, a pseudonymous crypto market analyst, told his over 35,000 Twitter followers that the pioneer cryptocurrency has entered a “bottom phase” where he expects the price to remain stable between $18,000 and $25,000 until March 2023.

However, the analyst adds the caveat that this price floor will only hold if the Fed announces the already priced in interest rate increase of 75 bps. An announcement of a 100 bps hike will cause the market to shed more blood.

An announcement of 100 bps rate hikes has only a 20% chance of happening, according to data from CME Group’s FedWatch Tool. Regardless, data compiled by TIME still shows that the crypto market has a history of nosediving in the wake of Fed rate hike announcements.

The Fed rate hikes in March, May and June all saw at least a 10% drop in the price of BTC. The fall after the Fed’s July meeting was less severe, the TIME report noted.