- BTC, ETH, and SOL shed value on Wednesday following the central bank’s decision to increase interest rates again.
- Digital assets were not alone as the stock market also dipped following the news, further signifying trading correlation.
- A cross-section of digital asset enthusiasts expressed worry that their favourite assets may have blown their last opportunity for an uptick before the end of the year.
Market leader Bitcoin (BTC) traded above $18,000 for the first time since the FTX crash, to the delight of users, but the joy was short-lived in the early hours of Wednesday.
BTCUSD Chart by TradingView
Major digital currencies tumbled following the news of an increased interest rate approved by the Federal Reserve, wiping off little gains made in the past few days. BTC was already flying above $18k, trading at $18,310, lost 4.77% a few hours after the announcement and is currently exchanging hands at $17,404.
Ethereum (ETH) and Dogecoin (DOGE) followed the trend losing about 5.5% and 6.38%, respectively. This year has not been great for ETH as it keeps struggling despite all the prospects it held at the start of the year. The altcoin giant is valued at $1,270 just a few weeks before the year’s end, which has seen it lose over 50% of its value.
For the greater part of the year, the stock market and the cryptocurrency market have traded similarly under the influence of wider macroeconomic trends. Yesterday was no different, with the Dow Jones Industrial Average losing 103 points following the news while the S&P 500 fell by 0.5%.
With these frequent rises in interest rates, investors keep moving away from high-risk assets making the market take a bearish trend.
Users cannot see the light at the end of the tunnel
The Federal Reserve has used hikes in interest rates to counter inflationary trends in the market in recent months across various regions. Though the recent increase was by 0.5 points, the bank has signalled more increases in the coming months to push back inflation.
Most digital asset enthusiasts have described this year as unfortunate for the market due to major incidents that have hit the industry, wiping billions from the market cap. The larger crypto market cap is now a shadow of its former self as it struggles below $1 trillion. Even with the present negative trends, some users have expressed hopes for a better 2023.