Key Takeaways:
- The crypto market declined 70% since Nov 2021.
- A further drop might be in the books after the FOMC meeting.
- Additionally, whales jump ship, which supports the aforementioned claim.
YEREVAN (CoinChapter.com) – The crypto market suffered heavy losses year-to-date, as Bitcoin repeatedly fell below the $20,000 support in Q3. As a result, the collective market valuation of digital assets declined over 70% since the Nov. 2021 peak of $3 trillion and stood at $888 billion on Sep. 19.
However, the bottom is not in yet, as several factors point to a bearish scenario, at least in the short term.
Upcoming FOMC meeting
Nearly 20% of the mentioned losses came in the previous week, ahead of the upcoming Federal Open Market Committee (FOMC) meeting on Sep. 20.
In detail, many expect a 75 bps interest rate hike from the regulators to fight the growing inflation. The CPI data for August showed an 8.3% year-over-year inflation spike against the red-hot labor market, which means the inflationary pressure is not under control yet.
Ed Yardeni, the chief marketing strategist at Chief Investment Strategist at Yardeni Research, suggested that FOMC could “get it over with” and raise the interest rates by 100 bps.
It seems to me that they are committed to raising the interest rate significantly at this meeting next week. I do think they’re going to come around and conclude that maybe just get it over with, maybe 100 basis points instead of 75 basis points. And then maybe one more hike after that
commented the expert on Friday.
Also read: Annual inflation could fall to 5.7% in 12 months — survey.
Additionally, Bitcoin whales started to withdraw, according to data from a crypto analytical platform, CryptoQuant.
Whale-induced selloff?
The Bitcoin chart, presented in the latest Bitcoin report CryptoQuant, clearly shows a spike in exchange inflow, indicating a possible selling pressure coming from long-term holders. The spike typically declines prices as traders swap their BTC for fiat or other cryptos.
The platform analysts pointed out that long-term holders are a “critical cohort” among market players. They set an example for the “little fish,” which copy their behavior. Thus, watching the whales closely might help determine the market’s direction.
Historically, whenever long-term holders sent a considerable amount of Bitcoin to the exchanges, the market experienced a plunge. The Exchange Inflow CDD is a valuable metric to track their behavior. High values indicate that more long-term holders moved their coins for potential selling.
concluded the report.
Additionally, CryptoQuant pinned the expected BTC price at below $16,000. The 20% drop would send ripples through the overall crypto market capitalization, possibly tanking the latter below $700 billion for the first time since December 2020.
