- Bitcoin price plunged to $29,300 on Monday as the momentum faded.
- Altcoins like Sui, Pepe, Toncoin, and XRP were among the worst performers.
- Focus shifts to the upcoming Federal Reserve decision.
Cryptocurrency prices remained under pressure on Monday ahead as focus shifted to the upcoming interest rate decision by the Federal Reserve. Bitcoin plunged to a low of $29,312 while Ethereum fell to $1,850. As a result, the total market cap of all cryptocurrencies slipped by 2% to $1.17 trillion.
Fed interest rate decision ahead
The biggest catalyst for cryptocurrency prices this week will be the upcoming interest rate decision by the Federal Reserve. This decision, which is scheduled for Wednesday, will likely set the tone for what to expect in the remainder of the year.
Economists expect that the Fed will decide to hike interest rates by another 0.25% in a bid to fight inflation. If this happens, the Fed will likely push rates to the highest level since 2001.
However, most analysts believe that this will become the final rate increase of the year. Besides, America’s inflation has dropped from the pandemic-era high of 9.1% to 3.0%. If this trend continues, there is a likelihood that it will hit the Fed’s target of 2.0% in the coming months.
Read more: How to buy Bitcoin.
US economy is slowing
At the same time, there are signs that the American economy is slowing. Retail sales dropped by 0.2% in June, lower than the median estimate of 0.5%. This is an important figure since consumer spending is the biggest component of the country’s GDP.
Housing starts dropped by 8% in June while building permits tumbled by 3.7%, These numbers are signaling that the housing sector is cooling as mortgage rates rise. Existing home sales tumbled by 3.3% amid a lack of supply. Therefore, pausing interest rate hikes will help the Fed engineer a soft landing.
Cryptocurrency prices tend to react to Fed decisions. However, this reaction will only happen if the Fed catches investors by surprise. For example, they could rise if the Fed points to future rate cuts, which is highly unlikely for now.
Altcoin prices slump
Bitcoin approached the key psychological level of $29,000 as demand for the coin retreated. As a result, altcoins plunged since the two have a close correlation with each other. In most periods, altcoins tends to drop sharply when Bitcoin retreats.
Sui, the recently launched Ethereum rival, saw its price and volume slump. It dropped by over 8% in the past 24 hours while its volume fell to $81 million. It was followed by Pepe, Toncoin, and 1inch Network retreated by over 5% on Monday.
Other notable losers were coins that did well last week. DeFi tokens like Maker and Compound slipped by 5% while Gala, Flow, and XDC Network fell by 4%.
