Bitcoin's price has dropped to $84,490 amid rising expectations for a Federal Reserve rate hike in October, impacting the broader crypto market.
Summary
- Bitcoin is currently priced at approximately $84,490, down from Monday’s peak of $87,397, as the likelihood of a Federal Reserve rate hike in October rises to around 75% and December predictions are near 59%.
- Among the top 10 cryptocurrencies, only BNB and Solana are seeing gains over the past 24 hours, increasing by 2.75% and 2.31% respectively, while major coins like Ethereum and XRP are losing ground.
- Recent data shows $348.33 million in liquidations across crypto markets, with $270.89 million from long positions and $77.43 million from shorts.
Bitcoin's price has fallen to approximately $84,490 following a peak of $87,397 earlier in the week, as traders adjust to increasing expectations for a Federal Reserve interest rate hike next month.
This price drop comes after a significant rally that pushed Bitcoin from the mid-$70,000 range to an eight-month high within a week. The market is now pricing in a 75% chance of a rate hike in October and a 59% chance in December, according to the CME FedWatch tool.
As interest rates rise, borrowing costs can increase, which typically makes assets like Bitcoin, which do not yield returns, less attractive compared to cash and bonds. Higher rates can also tighten market liquidity and raise costs for leveraged trading, factors that historically depress cryptocurrency prices during periods of monetary tightening.
The Federal Reserve's recent interest rate hike was the first since July 2023, raising the benchmark range to 5.25%-5.5%. The adjustment was made amid concerns over inflation, with Core PCE, the Fed's preferred inflation metric, at 3.4%, significantly above the 2% target.
Market Cooling Off
The broader cryptocurrency market is also facing a slowdown. Ethereum has seen only a modest increase of 1.42% to around $2,689, while XRP remains stable at $1.52. Zcash has decreased by 2.5%, despite an impressive annual rise of over 2,700%.
In contrast, BNB and Solana are displaying positive momentum. BNB has risen by 2.75% to $781.33, continuing its upward trend after surpassing $790 earlier this week. Solana has increased by 2.31% to $116.08, following a recent surge to a nine-month high above $117.
Institutional interest in BNB and Solana is growing, distinguishing them from Bitcoin and Ethereum. Grayscale's Smart Contract Fund has allocated 30.6% to BNB, making it the fund's largest holding, while Solana gained support from a vote favoring the migration of ZetaChain token holders to its network.
Despite the downturn, the overall market sentiment remains cautiously optimistic. Spot Bitcoin ETFs recorded $998.9 million in inflows on Monday, marking the largest single-day intake in 11 months. The total cryptocurrency market capitalization currently stands at $2.93 trillion, reflecting a 2.5% decrease from last week’s high of $3 trillion.
The Crypto Fear and Greed Index sits at 73, indicating a state of "greed," while the Altcoin Season Index is at 51, suggesting a balance between Bitcoin and altcoin performance. The next significant event will occur on October 28, when the Fed's rate decision will clarify whether the current market pause is temporary or indicative of a more extended decline.
