Fed Chair’s Comments Sends the Crypto Market into Tumbles
In Jackson Hole, Powell communicated a hawkish message at the Fed’s annual symposium. In response to fears that the central bank is not yet finished raising rates aggressively, the markets swooned. Over the last day, the global crypto market cap declined by 3.19% to $964.24B. There has been a decrease of 16.62% in the crypto market volume over the past 24 hours, making the total crypto market volume $70.84B.
Bitcoin and Ethereum Prices Drop
Bitcoin continued to fall today and hit a monthly low of $19,907. It’s the first time the cryptocurrency has gone below $20,000 since July 14.
Since November 2021, Bitcoin’s market capitalization has dropped from almost $1.27 trillion to around $383 billion. It lost 6.4% in the past week. On the other hand, Ethereum’s market capitalization has dropped from almost $400 billion to around $180 billion. That is a 69% decrease from its all-time high of $4891.70.
According to data from Coinglass, traders conducted over $250 million in transactions in the cryptocurrency market during the past 24 hours. Bitcoin and Ethereum lead the way in liquidations with a total of $108.60 million and $65 million, respectively.
The Rest of the Market Takes a Hit
The US dollar and the stock market took a hit as losses neared 9% after the Federal Reserve signaled that it might start to raise interest rates sooner than expected. That suggests that the soft landing scenario might be over.
Powell’s comments at the Fed’s annual economic conference also triggered the rest of the market’s decline. Both the stock and crypto markets reacted negatively, with the S&P 500, Nasdaq, and Dow closing down more than 3%. According to insiders, the Fed might raise its key interest rate by 75 basis points at its next meeting.
Digital Asset Fund volumes were also on the lower side last week. Data from DefiLlama revealed that the total value locked across all blockchains had dropped over 5% in the past 24 hours. That suggests that the interest in DeFi has decreased. Some prominent DeFi platforms, such as MakerDAO, Uniswap, and Compound, have seen their TVL fall by double digits.
Last Minute Wakeup for DXY
The dollar’s traditional haven appeal returned to haunt crypto markets as the stock sell-off continued. The DXY index, which initially saw heavy losses, managed to bounce back to levels within striking distance of its 20-year highs.
At the end of August, the dollar index (DXY) was around 108.9, up from its lows of 107.6. According to Kevin Svenson, staying the course benefits the currency because assets will continue to decline.
Danny Baldus-Strauss, an entrepreneur and investor, noted on Twitter that the correlation between the DXY and Bitcoin was an ongoing bottom and top indicator. He noted that the DXY index could be a good place to start if Bitcoin is still in a bear market. According to him, significant bottoms in the cryptocurrency have been accompanied by local tops in the dollar.
Rumors on Mt. Gox Dismissed as “typical crypto”
Over the weekend, the lack of liquidity in the markets exacerbated the already nervous situation. Rumors that creators would release the funds of failed exchange Mt. Gox to creditors on August 28 triggered a sell-off.
Traders previously made various claims regarding the availability of a large chunk of Bitcoin. Some claim that a large chunk of the currency might be released in one go, while others claim that the team would disperse funds piecemeal.
Despite the various claims about the availability of a large chunk of Bitcoin, analyst Josh Rager noted that the selling pressure resulting from releasing the full hoard would not create a doomsday scenario.