Elijah Idowu
The crypto market lost $400 million to liquidations over two days following a crucial Federal Open Market Committee (FOMC) policy meeting. The FOMC, an arm of the Federal Reserve, decided to maintain current interest rates, a decision that led to significant sell-offs in the crypto sector.
The meeting’s outcome had a substantial impact on the crypto market, causing liquidations and price drops among major digital assets. Bitcoin’s price fell from $70,000 to $66,000, and other altcoins also experienced notable declines.
In their fourth policy meeting of the year, the FOMC decided against cutting rates, leading to increased volatility in the crypto markets and resulting in $400 million in liquidations.
Federal Reserve Chair Jerome Powell explained that the FOMC is committed to maintaining its tight monetary policy, citing its success as the reason behind their decision.
FOMC Decision Triggers Crypto Market Decline
The FOMC’s recent decision led to a significant decline in the value of various crypto assets. Bitcoin, the largest cryptocurrency by market cap and price, dropped from $70,000 to $66,000. Ethereum, the second-largest crypto asset and top altcoin, fell from $3,700 to $3,400.
Other cryptocurrencies such as Cardano, Solana, and Ripple also saw substantial declines, each experiencing an 8% reduction in price. This decision by the FOMC not only caused a $400 million loss due to liquidations but also highlighted the increased volatility and diminishing investor confidence in the crypto markets today.
CPI Results Ignite Optimism in Crypto Market
Despite the FOMC’s decision, there was a glimmer of hope for the crypto market. The release of the United States Consumer Price Index (CPI) results brought some optimism, as the year-over-year inflation rate for May came in at 3.3%, slightly better than the anticipated 3.4%.
The United States has maintained a stringent economic policy regarding rate cuts, contrasting with other Western economies like the European Union and Canada, which have opted to implement rate cuts to combat inflation.
A survey conducted by Grayscale revealed that 41% of respondents are now looking to Bitcoin as an alternative solution to address the country’s ongoing inflation issues.
Donald Trump, the leading opposition candidate in the upcoming US presidential elections, has fully embraced the crypto industry, pledging to enhance the adoption of cryptocurrencies in the country if elected.
Note this:
A federal rate cut is a measure taken by a government financial authority to stabilize prices, control inflation, and stimulate economic growth. This strategy works by lowering finance costs, encouraging businesses and consumers to invest and borrow.
The traditional financial market was also impacted by the FOMC’s decision not to cut interest rates.
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