Why is the crypto market down today?
JAN 30, 2023
By Kyle White
The crypto market is down today as Bitcoin and stocks retrace their recent gains and investors await this week’s FOMC and the revelation of the next interest rate hike.
The crypto market is down today, as market volatility increases ahead of the Feb. 1 Federal Open Market Committee (FOMC) meeting and a slew of negative news events weigh on Bitcoin, Ether and altcoin prices.
After jumping to new highs for 2023, Bitcoin (BTC $23,123) and Ether
(ETH $1,584) retraced a portion of their recent gains.The primary downside catalyst appears to be investors’ apprehension over the upcoming FOMC decision on interest rates and similar pullbacks are also being seen across the stock market which is down.
After the Jan. 18 announcement that the United States Department of Justice levied enforcement action against Bitzlato and ramped-up pressure on certain players in the crypto sector, Binance started to block certain users' accounts.
After initially benefiting from a Consumer Price Index (CPI) print which showed inflation slowing beyond expectations in December 2022, crypto and stock prices began to cool as retail data missed expectations and earnings diminished.
U.S. stocks drop ahead of the FOMC
Crypto prices are still highly correlated with the Dow and S&P 500. As mentioned earlier, macro and crypto markets rallied after a better than expected CPI report, but lingering concerns about the health of the U.S. and global economy resurfaced after reported earnings showed a slowdown in corporate profits and consumer demand.
Most major banks still expect the U.S. to experience a sharp recession at some point in 2023.
According to U.S. Bank data, there is more pain to come in the economy:
“Inflation, interest rates and earnings remain key to equity returns. At present, inflation remains elevated, interest rates are rising and consensus earnings projections for 2023 are trending lower.”
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