Experts: new Fed policy will lead to a sell-off on the crypto market

The world's largest cryptocurrency, Bitcoin, has fallen in price as the market is believed to be preparing forthe Federal Reserve's monetary policy meeting, at which the US central bank is likely to slow down its money printer.

The two-day meeting is expected to becaptures Tuesday and Wednesday, will end with the Fed's statement about plans to reduce the rate of asset purchases from the current $ 120 billion per month by $ 30 billion monthly, or half of the specified figure.

Some cryptocurrency traders and investorsbelieve that the stimulus program has strengthened Bitcoin's appeal as a hedge against inflation, so a policy change could be bearish.

Bitcoin started December around the $57,000 level and is now trading around $48,000, so the cryptocurrency has lost more than 30% from its November peak.

Head of Research, Stack FundsLennard Neo attributed the recent fall in the cryptocurrency to uncertainty in the market, which forced investors to abandon risky assets. Due to its volatility, Bitcoin is perceived in this way. In theory, tighter monetary policy makes risky assets less attractive.

According to senior market analyst Oanda EdwardMoya, investors are hesitant to buy bitcoins at current levels. According to him, they expect a serious failure of the cryptocurrency market, which could lead to testing the level of $ 40,000.

Expert in Cryptocurrency Exchange Traded Funds (ETF) andLaurent Cassie, director of CEC Capital, noted that liquidations and trading volume do not allow hopes for a rise in the crypto market. In his opinion, the breakout above $ 50,000 will occur later than expected.

The US woke up and bought at the expected reduced prices, which pushed the price up a bit, but it is still under pressure, Cassie concluded.

There seems to be a strong sense of uncertainty about the direction of the market despite strong indicators on various charts, '' supported Quantum Economics cryptanalyst Jason Dean.

According to Dean, short-term sentiment and levelsconfidence in cryptocurrency is perfectly reflected by the Fear and Greed Index. It appears to play a more important role than long-term fundamentals such as record highs in address activity and hashrate.

The Fear and Greed Index is a tool used by some investors to evaluate the market. Now, for a month straight, it has been signaling “extreme fear.”

We expect uncertainty to remain the predominant factor until there is enough momentum for a breakout, Dean said.

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