Cryptocurrency prices declined during trading on Tuesday, as investors grew more cautious ahead of the Federal Reserve's interest rate decision, while expectations of a possible tightening of monetary policy boosted pressure on high-risk assets.
Bitcoin, the largest cryptocurrency by market capitalization, fell by more than 2% to its lowest level in 11 days, while Ethereum came under even greater selling pressure, declining by more than 3%, as investors reduced their positions in digital assets awaiting the outcome of the US Federal Reserve's decisions.
In terms of trading, Bitcoin fell by 2.21% to $63,469.50, while Ethereum dropped by 3.23% to $1,884.90, and Ripple declined by 2.89% to trade at $1.0586.
Markets are awaiting the Federal Reserve's decision, scheduled for tomorrow, amid widespread expectations that interest rates will remain unchanged. However, the greatest focus is on the press conference of the bank's chairman, Kevin Warsh, in search of any indications regarding the future of monetary policy and his assessment of inflation developments and economic activity.
In contrast, Citadel Securities broke with the prevailing market consensus, predicting that the Fed would raise interest rates by 25 basis points, arguing that such a move would enhance the central bank's credibility in combating inflation, especially if price pressures continued above target levels.
Interest rate expectations are among the most influential factors affecting the performance of cryptocurrencies, as higher interest rates increase the attractiveness of fixed-income instruments and bonds, while declining demand for high-risk assets such as digital currencies and technology stocks.
Despite the current pressures, a number of analysts believe that the long-term direction of the cryptocurrency market will remain linked to developments in US monetary policy, along with continued institutional investment flows and regulatory developments in the United States, which may play an important role in restoring investor confidence in the coming period.
Investors are also awaiting any signals from the Federal Reserve regarding the timing of the interest rate cut cycle, as a less hawkish tone from the bank could positively impact risk appetite and revive momentum in digital asset markets, while continued monetary tightening could keep pressure on cryptocurrencies in the near term.
