Interest rate hikes are expected to slow as central banks continue to wage war against the threat of inflation. In response, the crypto market could remain volatile with other risky assets.
Reports indicated that the US will release November inflation data this week to determine the course of the Federal Reserve’s policy decision through the end of 2023.
‘Super central bank week’ puts pressure on the crypto market
The US Federal Open Market Committee (FOMC) announced its decision to raise interest rates on December 14 with a 75% probability of doing so by 50 basis points. This comes after six significant increases this year. At the same time, the central banks of Europe and Great Britain will also announce their decisions on interest rates in the week. Therefore, this week will begin “Super Central Bank Week” around the world.
Today, the global cryptocurrency market capitalization fell back to $877 billion in a decline of about 2% in the last 24 hours, according to CoinGeck. At press time, Bitcoin was trading below $17,000 per coin, while Ethereum remained below $1,300.
All the top cryptocurrencies by market capitalization were in the red after opening the new week.
Will ‘Digital Gold’ work in a low inflation regime
In global markets, gold prices fell due to the upcoming political decision. Since gold is considered a hedge against inflation, a decrease in the level of inflation lowers the price of the yellow metal. Often equated with digital gold, Bitcoin is also expected to remain volatile in the transition.
Bloomberg Senior Strategist Mike McGlone recently tweeted that BTC is turning into a “high beta version of gold.” This means that Bitcoin can outperform gold during a market downturn. However, BTC can also slide deeper when gold loses its luster.
And with recessionary sentiment heading into 2023, McGlone predicts gold to become a top performer.
At press time, Bitcoin’s Fear and Greed Index reflects the fear in the market.
Meanwhile, the total value locked in the decentralized financial market has also decreased in the last 24 hours. DeFiLlama recorded TVL below $42 billion, down about a percent over the period.
BeInCrypto has reached out to the company or individual involved in the story to get an official statement on the recent events, but has yet to hear back.