Altcoins followed suit, leading to a correction across the crypto market ahead of a key week with the Fed’s rate hike decision and quarterly results from tech giants.
Why did the crypto-currency market experience a sudden drop?
Traders expected a correction in the price of bitcoin, as the rally did not experience a pullback. The price of bitcoin has been steadily rising and has even broken through its 200-DMA, making a 40% rally in January.
In addition, investors remain cautious ahead of a busy week of corporate earnings and central bank meetings, led by expected rate hikes from the U.S. Federal Reserve, the European Central Bank and the Bank of England.
According to CME’s FedWatch tool, the probability of a 25 basis point rate hike by the Fed at the FOMC meeting is 97.9 percent. However, a 50 basis point hike is still a possibility, and Wall Street economists believe investors need to wait a little longer before the Fed changes its mind.
Meanwhile, the European Central Bank plans to raise interest rates by 50 basis points in February and March. Policymakers are pushing to control inflation as the risk of a global recession increases.
Bitcoin and altcoins have suddenly fallen
The price of bitcoin is currently trading at $23,259, after a 2% drop in a few hours. The 24-hour low and high are $23,166 and $23,919. The price of BTC hit a high of $23,861 on Sunday.
The price of Ethereum has also fallen by 2%, with the current price trading at $1,592. Major altcoins such as XRP, DOGE, MATIC, ADA, etc. have plunged more than 3% in the past 24 hours.
Despite a drop in the US dollar index (DXY) to 101.68, crypto-currency prices experienced a correction. Thus, this indicates that investors sold their crypto holdings before the Fed rate hike.