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FOMC Crypto Alert: Why Are Cryptos Crashing Ahead of Federal Reserve Meeting Update?

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Cryptocurrency is off to a rocky start this morning, and it can all be traced to the government. The Federal Reserve’s Federal Open Market Committee (FOMC) is meeting today. And with regulation in focus and inflation on everyone’s mind, crypto bulls are not expecting to hear what they want to hear. As a result, there’s a fairly large amount of market selloffs occurring. The FOMC crypto volatility continues a bearish trend across the market. Here’s what you need to know.

Magnifying lens over background with building icon and text FOMC, with the financial data visible in the background. 3D rendering.

Source: g0d4ather via Shutterstock

Indirectly, crypto investors can thank the Fed in some part for the boom in digital currency this year. Since the onset of the coronavirus pandemic, the central bank has taken it upon itself to buy bonds en masse in order to stimulate the economy. This is, in turn, making the market ripe for higher-risk investments than some would normally make. Of course, the volatile crypto market is one major area where these investors have poured in.

The massive influx of investments have helped to make millionaires, sending prices of Bitcoin (CCC:BTC-USD) soaring by over $30,000 this year. It also allowed altcoin plays like Dogecoin (CCC:DOGE-USD) and Shiba Inu (CCC:SHIB-USD) to gain major ground as arbitrage plays. However, the upcoming Fed meeting has the potential to bring this era of massive crypto gains to an end, at least temporarily.

FOMC Crypto Alert Has Digital Currency Values Falling in Anticipation of Fed Meeting

Investors are on high alert around the potential FOMC crypto inhibitor happening today. This meeting is of special interest to investors across both the traditional stock market and crypto; that’s because today, the Fed is expected to announce its intention to drastically taper down its spending on bonds.

The bank’s massive spending has made for great conditions for the crypto market. But, a taper could close this era of high-risk spending across the board. Crypto investors have known about this plan for a while now; Fed officials have been discussing their intentions to taper for months. But with the FOMC meeting coming today, it appears these statements are no longer just ideas. They’re much more real, and crypto trading activity reflects that.

Bitcoin trading in particular is quite high on the selling side of things today, with the coin struggling to mount the $47,000 mark and stay above it. And while Bitcoin gains remain paltry, other coins still struggle to even break into the green. Outside of Ethereum (CCC:ETH-USD) competitor Solana (CCC:SOL-USD), the rest of the top 10 largest cryptos are trading in the red.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.



Read More: FOMC Crypto Alert: Why Are Cryptos Crashing Ahead of Federal Reserve Meeting Update?

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