Cryptos Wait For Fed’s Decision – Will This Crypto Crash Be Transitory?

Crypto assets diverged from trends in equity assets as markets worldwide waited for the Fed to hand over its decision on hiking interest rates to combat inflation. Crypto markets dropped more than 3 percent overnight while equity markets in Europe rallied amidst an unscheduled meeting of the ECB to take stock of the market situation. Wall Street Futures are also in green zone whereas Asian indexes had closed mixed earlier. While the Fed is widely expected to opt for a 75-basis points hike, any softer measure would likely cheer the many asset classes including cryptos.

While the ECB meeting pushed down bond yields, it also pushed the Euro higher, dragging down the Dollar Index.

Crypto market capitalization is currently at $903 billion, down more than 3 percent on an overnight basis.

Bitcoin is trading at $21,406, down 4.75 percent on an overnight basis. Bitcoin’s market cap is close to $404 billion. Bitcoin dropped to a fresh low of $20,178.38 in the past 24 hours.

Bitcoin, meanwhile slipped to the 17th position among all assets, as per rankings published by companiesmarketcap.com. The lead cryptocurrency has also slipped to the 26th rank among fiat/ digital currencies as per rankings published by coinmarketcap.com.

Ethereum too dropped to a fresh low of $1,025.68 in the past 24 hours. It is currently trading at $1,114.81, down 7 percent on an overnight basis.

3rd ranked Tether (USDT) traded between $0.9991 and $0.9982 in the past 24 hours. The USDT market cap however dropped to $70.8 billion, versus $71.5 billion on Tuesday and $72.2 billion on Monday.

Meanwhile, Tether has in a blogpost condemned false rumors about its commercial paper holdings. Tether announced that over 47 percent of total USDT reserves are now US Treasuries and that commercial paper makes up less than 25 percent of USDT’s backing.

4th ranked USDCoin (USDC) traded between $1.00 and $0.9998 in the past 24 hours. USDC market cap is at $54.3 billion versus $54.1 billion on Tuesday and $54.3 billion on Monday.

6th ranked BinanceUSD (BUSD) traded between $1.00 and $0.9985 in the past 24 hours.

52nd ranked algorithmic stablecoin Neutrino’s (USDN) Dollar de-peg widened, trading between $0.9658 and $0.9048 in the past 24 hours, versus the $0.9795 to $0.9492 range a day earlier.

58th ranked algorithmic stablecoin USDD to drifted away from the $1 level, trading between $0.9838 and $0.9567 in the past 24 hours, versus the $0.9919 to $0.9764 range on the previous day.

Exacerbating the pain of a likely massive rate hike by the Fed are concerns emanating from the DeFi and stablecoin categories. The push to expedite the scope of regulations to crypto world as well as the concerns related to corporates with large crypto exposures are also haunting the wider crypto world. But for now, the focus appears to be on how much the Fed will hike rates. It is an anxious wait indeed.

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