Fed Rate Hike Fears Send Crypto Prices Tumbling

The US Federal Reserve's decision on October 28 is set to impact the crypto market. The PMI, or Purchasing Managers' Index, for the United States jumped to 58.4 points in September, its highest level since July 2021. This increase in activity and input prices has raised expectations of a further rate hike by the Fed.

The CME FedWatch tool shows that the market is pricing in a 69.7% chance of a 25 basis point interest rate increase on October 28, up from around 40% just days before. This shift in sentiment has led to a decline in crypto prices, with Bitcoin falling by 2.75% and Ether down by 2.53% over the past 24 hours.

The relationship between rising rates and crypto prices is straightforward: higher interest rates make borrowing more expensive, reducing demand for assets that do not generate income, such as cryptocurrencies.