Crypto and Stocks Slump as Fed Rate Hike Odds Rise to 37%

The cryptocurrency market has seen a significant drop in value over the past 24 hours, falling by 2.8% to $2.24 trillion. Bitcoin and Ethereum have also taken a hit, with their values decreasing by 2.7% and 3.2%, respectively.

This decline is not isolated to the cryptocurrency market, as global equities are also experiencing a downturn. South Korea's KOSPI index has plummeted by over 10%, while Nvidia shares have dropped around 5%. The tech-heavy KOSPI index and chipmakers such as Samsung and SK Hynix have faced heavy selling pressure.

The main reasons behind this sell-off are the rising expectations of a Federal Reserve interest rate hike. According to the CME Fed Watch tool, the odds of a 25-basis-point hike have increased to around 37%, up from roughly 10% a week ago. This has led to concerns that higher rates will negatively impact crypto and growth stocks.

The AI and chip sector correction is also contributing to the sell-off. Investors have poured significant amounts into AI infrastructure, but now question how quickly those investments will generate returns. As technology stocks decline, investors are becoming increasingly cautious across the broader market.