Markets
Crypto Market Loses $400 Million in Selloffs as US Policy Meeting Triggers Selling
Jerome Powell, Chairman of the US Federal Reserve
The crypto industry lost $400 million in liquidation in two days after a key political meeting, held yesterday by the Federal Open Market Committee (FOMC), sparked frenzied selling.
The Federal Open Market Committee is a branch of the Federal Reserve and decided at the meeting to keep interest rates stable.
The outcome of the meeting had a solidifying effect on the crypto industry, triggering liquidations and affecting prices of major crypto assets. The price of bitcoin knocked down from $70,000 to $66,000 and other altcoins also witnessed a sharp drop in price as a result of the meeting.
The FOMC, at its fourth policy meeting of the year, refused to cut rates, triggering volatility in crypto markets, which resulted in a $400 million sell-off.
Federal Reserve Chairman Jerome Powell explained the reason for the decision at the FOMC meeting, stating that the committee is committed to maintaining its restrictive monetary policy, which has proven to be a success.
News continues after this announcement
News continues after this announcement
FOMC Decision Drops Crypto Prices
The FOMC decision resulted in several crypto assets falling in price value. Bitcoin, the largest crypto asset by price and market cap, fell from a staggering $70,000 to $66,000. Ethereum, the second-largest crypto asset and the largest altcoin, fell from $3,700 to $3,400.
Other crypto assets like Cardano, Solana and Ripple also felt the impact of the FOMC decision and fell in price value. All three crypto assets saw a price reduction of 8%.
The $400 million loss from liquidations reflects increased volatility and decreased investor confidence that are gaining ground in crypto markets today.
IPC results spark optimism
It wasn’t all bad news for the crypto market following the FOMC meeting decision. The release of the US Consumer Price Index results generated some optimism because the numbers were a little better than expected. The report showed an annual inflation rate of 3.3% for May, slightly lower than the 3.4% forecast.
The United States has adopted a strict economic policy regarding the issue of rate cuts. This is a departure from other Western economies, such as the European Union and Canada, which have decided to implement rate cuts to combat inflation in their countries.
A survey carried out by Grayscale reveals that 41% of voters are turning their attention to Bitcoin in search of alternatives to deal with the country’s persistent inflation.
Donald Trump, the main opposition figure in the upcoming US presidential election, has embraced the crypto industry, fully committing to deepening cryptocurrency adoption in the country if elected.
What to know
- A federal rate cut is an action by a government financial authority intended to stabilize prices, control inflation, and stimulate economic growth. This works because reducing financial costs can encourage businesses and consumers to invest and borrow.
- The traditional financial market was also affected by the FOMC’s decision not to reduce interest rates.