Cryptocurrency values continued to decline on Tuesday as traders anticipated the second interest rate decision from the Federal Reserve this year.
Among the worst performers was Pi Network (PI), which saw a decline of nearly 13%. JasmyCoin (JASMY) fell by 6%, while Litecoin (LTC) and Ethena (ENA) each dropped by more than 5%.
The overall market capitalization of all cryptocurrencies decreased by 1.70%, settling at $2.7 trillion, resulting in a loss of over $1 trillion in value over recent months. Liquidations within the last 24 hours soared to more than $227 million.
This latest wave of selling in the crypto market paralleled a dip in the stock market. The Dow Jones index fell by 410 points, while the Nasdaq 100, known for its tech focus, dropped 350 points. Major stocks like NVIDIA, Tesla, Microsoft, and Apple all saw declines exceeding 1%.
Jasmy, Pi Network, LTC, and Ethena fall ahead of FOMC decision
The current turmoil in both crypto and stock markets is largely due to adjustments in anticipation of the Federal Reserve’s upcoming interest rate decision. The Fed is currently in a two-day meeting, with a final announcement expected on Wednesday.
Analysts predict that the Fed will keep interest rates steady at 4.50%. However, attention will be on the quarterly dot plot, which may provide insights into when the next rate cut might occur.
Both stock and crypto investors are hopeful that the recent downturn and growing recession fears may encourage some Fed officials to adopt a more dovish stance. Such a shift could serve as a catalyst for Bitcoin (BTC) and altcoins like Pi Network, Ethena, Jasmy, and Litecoin. In a note to Bloomberg, an analyst remarked:
“The ongoing trade tensions and tariff implementations have introduced significant uncertainty. Investors are eager to understand how these policies are influencing the Fed’s economic outlook, especially concerning inflation and growth projections.”
Bitcoin and other altcoins faced declines after Ki Young Ju, a well-known analyst and the founder of CryptoQuant, cautioned that the bull market may be over. He stated:
“I’ve been calling for a bull market over the past two years, even when indicators were borderline. Sorry to change my view, but it now looks pretty clear that we’re entering a bear market.”
On a brighter note, a more dovish stance from the Fed could potentially boost Bitcoin and altcoins, reminiscent of the market dynamics during the early days of the COVID-19 pandemic. Initially, cryptocurrencies experienced a severe drop but rebounded strongly after the Fed reduced interest rates.