The cryptocurrency market has continued to face a downturn today, leaving investors on edge as Bitcoin and other major cryptos experience a dip. Meanwhile, several factors might have potentially contributed to this decline, as investors are treading with a cautious eye on economic indicators and the looming Federal Reserve meeting.
So, let’s take a look at the potential factors that might have triggered the recent crypto market selloff.
Potential Reasons For The Recent Dip
U.S. CPI Data As Fed’s Decision Looms
Investors are treading carefully as the U.S. Consumer Price Index (CPI) data reveals cooling inflation rate of 3.1% in November. Meanwhile, the latest data also showed that on a monthly basis, the inflation rose 0.1%, while the core CPI surged 4% on an annual basis.
Despite this dip, anticipation grows ahead of the Fed’s meeting starting today, December 13, as the inflation remained above the Federal Reserve’s 2% target range. Now, the market eagerly awaits insights into the Fed’s stance on potential rate hikes, a decision with far-reaching implications for global financial markets, including cryptocurrencies.
While the CME FedWatch Tool showed that there are 98.2% chance of the Fed keeping the interest rate unchanged at their upcoming gathering, the investors seem to be waiting on the sideline before putting any further bets. In addition, the rate-cut decisions by the central bank are also something that the market eagerly anticipates.
Profit Booking and Economic Health
Another factor contributing to the market’s recent slump could be profit booking by investors seizing recent gains from the notable rally in the crypto market. Notably, Bitcoin, Ethereum, and other major cryptocurrencies reached yearly highs in the past weeks, as the risk-bet appetite of the investors grew due to the absence of any negative catalysts in the market.
In addition, the market participants seem to be seeking clarity on the nation’s economic health, with the U.S. Producer Price Index (PPI) data set to be released later today. This key economic indicator may influence market sentiment as investors weigh their bets in the digital asset space.
In a climate where uncertainty prevails, market participants closely monitor these developments, understanding that each piece of data has the potential to sway the crypto market either way.
Also Read: BTC, Pepe Coin Loses Momentum As FET Advances
How’s Bitcoin & Other Cryptos Performing?
The global crypto market has been staying in the negative territory through the week, as evidenced by the recent performances of the market. Meanwhile, the global crypto market cap was down 1.71% and stayed at $1.54 trillion as of writing, while the total market volume fell 11.94% to $70.76 billion.
Notably, the recent slump in the digital asset space could be attributed to the losses noted in the major cryptos BTC, ETH, SOL, and others. As of writing, the Bitcoin price plummeted 1.12% to $41,030.94, while the Ethereum price slipped 2.1% to $2,173.15.
On the other hand, the XRP price plunged 2.04% to $0.6064, with its trading volume declining 10.6% to $1.51 billion. Simultaneously, the Solana price decreased by 6.02% to $66.17 at the same time.
What’s Next?
As the cryptocurrency market faces a recent downturn, investors are now eagerly speculating on the factors that could shape its immediate future. The crypto landscape hinges on pivotal events, each with the potential to sway market sentiment.
The Federal Reserve’s upcoming decision holds the key to the crypto market’s fate. A dovish stance may spark a rebound from the recent slump, while a hawkish approach could extend the ongoing market selloff. Investors keenly await insights from the Fed, recognizing its influence on the broader financial landscape.
Simultaneously, the speculations surrounding the approval of a Bitcoin Spot ETF loom large, with potential approval likely triggering massive rally. On the other hand, the eagerly anticipated Bitcoin Halving event could also catalyze a bullish run, and market watchers predict the possibility of Bitcoin reaching new all-time high following that.
Also Read: Decentralized Exchange OKX Suffers Major Hack Losing $400K, Exchange Initiates Action
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
