Bitcoin (BTC) and Ethereum (ETH), the two largest cryptocurrencies by market capitalization, each declined as much as 5% ahead of the U.S. Federal Reserve’s Sept. 18 decision on interest rates.
The cryptocurrency market fell in Asian trading today (Sept. 16) as markets look to the upcoming interest rate decision by the U.S. central bank.
While the price declines have moderated, Bitcoin is still down 2% on the day and trading at $58,750 U.S., while Ethereum’s price is down 3% at $2,300 U.S.
The drop comes days before the U.S. Federal Reserve is expected to lower interest rates for the first time in more than four years.
Futures traders are betting 100% that the central bank lowers rates at the conclusion of its policy meeting on Sept. 18. The only debate is whether it is a 25 or 50-basis point reduction.
Traders are currently pricing in a 65% chance of a 25-basis point rate cut from the Federal Reserve, though the odds of a larger 50-basis point cut have been rising in recent days.
At one point, Ethereum’s price was down as much as 5.5% in the last 24 hours, according to market data, its worst one-day decline in more than a month.
Analysts say growing uncertainty over how aggressive the U.S. Federal Reserve will be in lowering interest rates is impacting sentiment towards riskier asset classes such as crypto.
However, lower interest rates are generally seen as a positive catalyst for markets and risk assets such as stocks and cryptocurrencies.
Bitcoin’s price has increased 33% so far this year while Ethereum’s price is flat on the year (up 0.19%).
