What happened
Cryptocurrencies took a hit this morning as investors brace themselves for the Federal Reserve’s upcoming meeting this week, which is expected to end with yet another big rate hike.
![Dogecoin [DOGE] to rise beyond 40%? Whale activity may spur rally](https://crypto.newswireservice.net/wp-content/uploads/2023/02/doge-wale-1000x600-120x86.jpg)
As of 10:41 a.m. ET Monday, the price of the world’s largest cryptocurrency, Bitcoin (BTC -3.00%), traded roughly 3.3% lower over the last 24 hours. At one point earlier this morning, the price of Bitcoin had fallen to a three-month low below $19,000 per token.
The price of meme tokens Dogecoin (DOGE -3.36%) and Shiba Inu (SHIB -5.06%) traded 4.5% and 5.4% lower, respectively.
So what
The Fed will begin its September meeting tomorrow and then likely raise its benchmark overnight lending rate, the federal funds rate, on Wednesday followed by public comments from Fed Chairman Jerome Powell.
Image source: Getty Images.
After new inflation data came in hotter than expected last week, sending markets tumbling, it became all but obvious the Fed would do at least a 0.75% rate hike at this September meeting, which would be its third such move in a row. But there is also a chance the Fed surprises the market and hikes rates by a full percentage point. Currently, the CME’s FedWatch tool has the likelihood of a full-point hike at 20%.
The U.S. economy is already in a technical recession after U.S. gross domestic product (GDP) contracted in both the first and second quarters of the year, but many are concerned that these aggressive rate hikes from the Fed could tip the economy into a much more severe recession.
Continued rate hikes do not bode well for cryptocurrencies, which have already been hammered this year. As rates rise, safer assets start to yield more, which makes riskier assets like tech stocks less appealing.
Cryptocurrencies have moved a lot like highly valued tech stocks this year but are arguably even riskier because they are more difficult to value. While one can say that a tech stock looks appealing at a certain valuation, it’s a lot harder…
![Dogecoin [DOGE] to rise beyond 40%? Whale activity may spur rally](https://crypto.newswireservice.net/wp-content/uploads/2023/02/doge-wale-1000x600-350x250.jpg)
