Crypto Market Plunges as Interest Rate Hike and Fed Decision Spark Panic

The cryptocurrency market took a sharp downturn on Sunday evening, with Bitcoin plummeting to levels not seen since February. The collapse has left BTC maximalists disappointed and Ethereum falling back to December prices.

BTC dropped 12% in 24 hours, wiping out 20% of its value over the past week. Ethereum suffered an even greater loss, plummeting 21% in a day and losing 30% in a week. The CoinDesk 20 Index also fell 12% in 24 hours.

The Bank of Japan's interest rate hike last week may have triggered this market reaction, as the yen surged and the Nikkei stock index tanked. This downward trend spread to the US, with the Nasdaq dropping over 5% in two days and futures down 2.5% on Sunday evening.

The Federal Reserve's decision to hold interest rates steady but hint at a possible September cut has also contributed to market uncertainty. Traders had priced in a high likelihood of lower U.S. rates, with a 100% chance of a reduction in September and a 71% chance of a 50-basis-point cut.