The cryptocurrency market is on edge waiting for the U.S. Federal Reserve's interest rate decision, which could impact leading cryptocurrencies like Bitcoin.
Fed Decision and Its Impact on the Crypto Market
The U.S. Federal Reserve is set to announce its interest rate decision soon, capturing the attention of crypto investors. Expectations are that the March 18-19 policy meeting will keep rates unchanged. Investors are anxious, aware of potential repercussions on cryptocurrencies, primarily Bitcoin. According to the CME Group’s FedWatch tool, there is a 98% chance rates will remain the same. Market analysts are observing Bitcoin's key price levels, noting that if the price stays above $81,000 by the weekly close, it might indicate market strength. However, a drop below $76,000 may induce additional short-term selling pressure.
Factors That Could Drive a Price Surge
One significant factor is the U.S. dollar. The dollar currency index (DXY) has been declining, which is generally favorable for risky assets like Bitcoin. A weaker dollar tends to boost investor interest in cryptocurrencies. Global liquidity also plays a crucial role. Central banks worldwide, including the Fed, have been printing money to maintain economic stability. An increase in the money supply often leads to higher asset prices, including stocks, real estate, and crypto. If the Fed signals the end of quantitative tightening, indicating a stop to reducing the money supply, the market could react positively.
Altcoins' Struggle with Heavy Losses
Ethereum (ETH) continues to face challenges with sellers maintaining dominance. After a 9% decline in the past week, ETH is now striving to stay above $1,900 and recover to $2,000. Meanwhile, Ethereum’s daily active users have sharply decreased, dropping from over 700,000 earlier this year to just 293,000 now. Other altcoins are also in the red. Solana (SOL), XRP, Cardano (ADA), and Tron (TRX) have all experienced significant declines over the past week. Many experts believe that a Fed rate cut could be a catalyst for a strong recovery in the crypto market.
The cryptocurrency market is awaiting the crucial Fed decision, which might influence upcoming price trends in the industry. Despite current losses, investors are hopeful for a possible positive turnaround.
