Bitcoin price falls below $17,000 as investors eye Fed rate meeting
Bitcoin (BTC-USD) retreated below the $17,000 mark on Monday as investors look ahead to the last US Federal Reserve meeting of 2022 this week.
The crypto ecosystem turned a sea of red on Monday, marching in lockstep with falling stock markets as traders tread carefully ahead of the latest reading for the US consumer price index (CPI) on Tuesday and the conclusion of the Federal Reserve’s interest rate meeting on Wednesday.
Analysts polled by Reuters expect CPI to have risen 0.3% in November, and economists expect the US Federal Reserve to raise interest rates by half a percentage point when the Federal Open Market Committee meeting ends in Washington DC on Wednesday.
Check: Crypto live prices
Bitcoin fell to $16,933 on Monday, down 1.4% in 24 hours. Ethereum (ETH-USD) fell 2.8% in the past week to $1,246.
Other altcoins fared even worse with Cardano (ADA-USD) down 6% in the past week to $0.30, and dogecoin (DOGE-USD) down 16% in the past week to $0.087.
See: Web3: Venture capital still flows into crypto, claims head of Outlier Ventures | Crypto Mile
The CoinDesk Market Index (CDI), which measures crypto’s performance, dropped 850.92 points, down 1.89% in the last 24 hours.
Most analysts, investors and economists are predicting that the Federal Reserve will raise interest rates by 50 basis points, which would signal a slowdown in successive rate hikes.
This will see the Fed take a less restrictive approach to monetary policy, which is likely to lead to a boost in equity markets such as the NASDAQ (^IXIC), with which bitcoin tends to correlate positively.
Read more: This AI tool “threatens human creativity” and the art world is worried
On Monday, the pan-European Stoxx 600 (^STOXX) was down 0.6% in early trade, and Bitcoin again revealed its tendency to march in lockstep with the price movements of global equity markets, as well as reacting sensitively to inflation readings.
Jeffrey Roach, chief economist at LPL Financial, told Reuters: “Easing producer prices signal a better inflationary environment.
“The Fed is likely to reduce the pace of rate hikes next week and should continue to reduce in 2023. However, the monthly increase in producer prices illustrates the need for continued tightening.”
The slowing pace of interest rate hikes in the US has historically created more buoyant markets — bitcoin responds accordingly with a positive price movement.
