Major coins dropped lower on Tuesday evening as the global cryptocurrency market cap fell 2.5% to $921.9 billion at 8:18 p.m. EDT.
|Cryptocurrency||24-Hour % Change (+/-)||Price|
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Why It Matters: Bitcoin and Ethereum traded lower ahead of the Federal Open Market Committee (FOMC) meeting due on Wednesday.
On Tuesday, the S&P 500 and Nasdaq closed 1.1% and 0.95% lower, respectively, while at the time of writing, U.S. stock futures were marginally higher.
The probability of a 75-basis point rate hike was at 82%, according to the CME FedWatch Tool — a signal that investors can expect a hawkish move from the U.S. central bank at the conclusion of the FOMC meeting.
Screenshot of CME Group’s Fedwatch Tool
“The Fed begins their two-day policy meeting and while a 75-basis-point expectation is widely expected, the key messaging by Fed Chair [Jerome Powell] might be that rates will stay elevated for much longer than what the market is expecting,” said Edward Moya, a senior market analyst with OANDA.
On Bitcoin, Moya said, “Bitcoin’s fate will be determined by this week’s central bank decision fireworks, which could help fuel any selloffs to retest the summer lows. Peak pessimism is almost here for crypto, which is needed before longer-term money piles back in.”
Justin Bennett tweeted Tuesday that the total market capitalization chart did not have the “best look” going into FOMC.
“A reclaim would be bullish, but this $913B area is resistance for [the total market capitalization] as of now,” said the trader.
— Justin Bennett (@JustinBennettFX) September 20, 2022
Cryptocurrency trader Michaël van de Poppe said on Twitter that it was “impressive” that interest in Bitcoin was “terribly low at this point, while a year ago everyone was hopping over each other to get in.”
“The irony on this is that the silent period is the best period to look for an asset like [Bitcoin], which is now.”
Impressive that the interest in #Bitcoin is terribly low at this point, while a year ago everyone was hopping over each other to get in.
The irony on this is that the silent period is the best period to look for an asset like #Bitcoin, which is now.
— Michaël van de Poppe (@CryptoMichNL) September 20, 2022
A tweet from community-driven analytics platform CryptoQuant noted that it was possible selling pressure from long-term holders was exerting downwards pressure on the apex coin.
The CryptoQuant analyst pointed to a metric known as Exchange Inflow Coin Days Destroyed (CDD) to make their case. Higher values of the metric indicate more long-term holders moved their coins for selling purposes.
Bitcoin Exchange Inflow CDD — Courtesy CryptoQuant
The analyst said that the metric has spiked recently and a move to the $16,000 level might be “the most probable scenario for Bitcoin in the short-term view.”