- Cryptocurrencies have come under pressure in the past few days.
- Bitcoin price has retreated from $45,000 last week to $42,000.
- The focus shifts to the upcoming US inflation data and FOMC decision.
Cryptocurrency prices stabilized on Tuesday morning, helped by the positive close in Wall Street where the Nasdaq 100 and Dow Jones indices jumped by more than 0.50%. Bitcoin was trading at $42,000 on Tuesday, up from Monday’s low of $40,000. Some analysts believe that the Bitcoin price dip would be relatively short-lived.
The top leading crypto tokens on Tuesday morning were KuCoin Token (KCS), Taboo Token, and Celestia (TIA), which were up by over 20% in the past 24 hours. All these tokens have more than doubled in the past few weeks as a Fear of Missing Out (FOMO) has returned in the market.
The next three days will be crucial for Bitcoin and other altcoins. On Tuesday, the US will publish the latest consumer inflation numbers, which are closely watched in Wall Street. Inflation, together with jobs, forms an important part of the Fed’s dual mandate. The bank looks at the two closely when making its monetary policy decision.
Economists believe that America’s inflation continued falling in October as the price of goods retreated. Gasoline, a key driver for inflation, has dropped to the lowest level in over two years as crude oil prices retreated. Other durable goods like furniture and clothing have also dropped.
The other important catalyst for cryptocurrencies like KuCoin, Taboo Token, and Celestia will be the upcoming Federal Reserve decision. In it, the Fed will look at last Friday’s strong non-farm payrolls (NFP) data and the latest inflation numbers to make its decision. The consensus is that the Fed will leave its rates at the current level between 5.25% and 5.50%.
The key catalyst for these coins and other assets will be the language of this meeting. A sign that the bank will hold rates higher for longer will be seen as a bearish thing. On the other hand, if the Fed takes a celebratory tone on inflation will be a positive sign.
Analysts believe that the Fed will push back against early rate cut talk that has helped push cryptocurrencies and stocks higher.
The other important catalyst for crypto prices will be the upcoming European and Swiss central bank decisions scheduled for Thursday. In most cases, though, these decisions tend to have no major implication on cryptocurrencies.
Historically, the last Fed decision of the year sets the tone for the performance of most cryptocurrencies, stocks, and even commodities.
