Crypto Market Cautious Ahead of Fed Rate Decision
The cryptocurrency market has become more cautious as it heads into the end of September, following a strong start to the week. The rally was driven by short-covering activity and renewed optimism surrounding potential regulatory developments for the crypto industry.
However, concerns over a potentially more aggressive Federal Reserve have returned to the spotlight, limiting the market's ability to sustain its recent gains. According to Cryptoquant, short liquidations reached one of their highest levels on September 21, but the momentum has since moderated.
The Federal Reserve's decision to raise interest rates and potential further tightening is expected to reduce liquidity for risk-oriented investments, making them less attractive compared to more stable alternatives like U.S. Treasury bonds. Currently, 10-year Treasury yields remain above 5.00%, increasing their relative attractiveness.