Bitcoin, Ethereum & Crypto Test New Lows as Market Braces for Bigger Rate Hike on Wednesday
The cryptoasset market crash continued on Tuesday, with bitcoin (BTC) falling to as low as USD 20,800 before trimming some of its losses. The significant selloff came as the market braces for the possibility of an unusual 75 basis point rate hike from the US Federal Reserve (Fed) this Wednesday.
At 14:47 UTC, bitcoin stood at USD 22,162, down 5% in the past 24 hours and down close to 30% in the past 7 days. At the same time, ethereum (ETH) traded at USD 1,203, down 1% for the day and 35% for the week.
The losses come as the probability of a 75 basis point rate increase by the Fed has increased since Monday, data from the derivatives exchange CME Group shows.
From a probability of 21.7% on Monday, there is now a 91% probability that the Fed will increase rates by 75-basis points at its ongoing meeting that ends on Wednesday this week, judging from the CME FedWatch Tool.
Major investment banks such as Barclays and Jefferies are also saying that a 75-basis point hike is likely following last week’s higher-than-expected inflation report, per the Wall Street Journal.
Commenting on the market from a more crypto-focused perspective, former BitMEX CEO Arthur Hayes wrote today that the USD 20,000 level for BTC and USD 1,000 for ETH will be critical.
If these levels break, “massive sell pressure” can be expected in spot markets as dealers hedge themselves, Hayes said, warning that this could even cause some unhedged over-the-counter dealers to “go belly up.”
Earlier in June, he estimated that USD 25,000 to USD 27,000 is the bottom of this bitcoin market cycle.
And although the selloff in crypto has been brutal, with crypto falling more than stocks in June, Galaxy Digital CEO Mike Novogratz is now more bearish on stocks than on crypto,
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