Cryptocurrency Market in Turmoil Amid Fed Interest Rate Concerns

Bitcoin and the rest of the cryptocurrency market had a difficult start to the year as concerns that the Federal Reserve may be about to embark on its final interest rate cut intensified. According to Bloomberg's report, on Monday, Bitcoin dropped below $90,000 briefly. This is the largest drop since January 1, decreasing nearly 5% in the previous month before rebounding on Monday. Other cryptocurrencies, such as Ether, are also struggling to achieve growth this month. Reports indicate that the cryptocurrency collapse is a result of uncertainty surrounding the Federal Reserve's policy changes. Investors believe the Fed is closing the door on further interest rate cuts. In the most recent Federal Open Market Committee (FOMC) meeting, Jerome Powell, Chairman of the Federal Reserve, announced that the US central bank will adopt a tougher stance in the future as the risk of inflation could rise. Barchart, a provider of investment tools and financial market trading, has reported that there is less than a 5% chance that the Fed will cut interest rates this month and a 95% chance of maintaining the current interest rate range of 4.25% - 4.5%. A lower likelihood of interest rate cuts means that liquidity and investor demand for risk assets such as digital assets will decrease.

The excitement about cryptocurrencies is still there despite the high interest rates on silver bonds Investors are betting on the possibility of a longer vacation before any changes in reserve interest rates, driven by a strong US economy and optimistic monetary policies from the incoming US President Donald Trump administration. While the high bond yields have dampened enthusiasm for digital currency, many in the field remain optimistic. This is mainly due to the recent involvement of President-elect Donald Trump in the digital asset space and the commitments he has made, including the establishment of a Bitcoin reserve fund for the US Treasury and turning the US into a cryptocurrency-friendly country. Trump also promised to reverse the cryptocurrency regulations enforced by the Biden-Harris administration. Trump, who is expected to take office on January 20, has caused increased economic tensions and instability following his proposed policies on taxes, immigration, and tariffs. Powell explained in the most recent meeting that the committee is examining the potential impacts of Trump's policies and how tariffs will affect domestic inflation. The sudden instability has also spread to stock market investors across global markets. The S&P 500 index has plummeted, erasing most of the gains seen after Trump's victory in the US presidential election held on November 5. According to a note from Charlie Morris, Chief Investment Officer of ByteTree Asset Management, major financial markets are "priced high". Morris also emphasizes that the technology sector may soon begin to retreat. DYOR! #Write2Earn #Write&Earn $BTC (BTCUSDT) {spot}