Bitcoin and Ethereum collapse continues
Bitcoin (BTC) and Ethereum's native token Ether (ETH) started the week on a depressed note as investors braced themselves for rate hike decisions from central banks, including the US Federal Reserve and the Bank of England.
On September 19, BTC's price failed to regain the $20,000 psychological support zone. The BTC/USD pair fell 6.5% to around $18,250, while ETH dropped 4% to around $1,280.
This dismal performance came as part of a broader decline that began in mid-August, when BTC and ETH suffered a combined 28% and 37% drop in market capitalization, respectively.
This week, the Fed and some of its global peers will potentially attack rising inflation by raising interest rates further.
Data compiled by Bloomberg show that the US central bank, along with the Swedish Riksbank, Swiss National Bank, Norway's Norges Bank, the Bank of England and others, will raise lending rates by a combined 500 basis points, or 5%.
The market's riskier assets reacted negatively to these upcoming policy meetings.
Last week, MSCI's flagship global equity index ACWI, which combines developed and emerging market equities, fell 4.25% to nearly $84. At its peak in November 2021, the index was trading at $107.39. Interestingly, Bitcoin and Ethereum peaked at $69,000 and $4,950 respectively in the same month.
Therefore, this increased correlation against the expectation of a global rate hike could continue to pull BTC and ETH down, despite their growth-oriented rhetoric.
Instead, investors may seek safety in low-volatility assets, including the US dollar and government bonds.
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