The crypto market weakened in tandem with the stock market on Tuesday, as market focus shifted back to the Federal Reserve meeting. Bitcoin briefly fell to around $63,400, while Ethereum dropped to around $1,874, bringing the overall crypto market capitalization down to $2.24 trillion in 24 hours.
Expectations for interest rate hikes have clearly intensified.
The market's primary focus right now is whether the Federal Reserve will signal a more hawkish policy stance. According to CME FedWatch data, traders' bets on a 25-basis-point rate hike by the Fed have risen to about 37%, compared to only about 10% a week ago.
Rising interest rate expectations typically suppress the performance of high-risk assets. This is because higher interest rates increase the attractiveness of risk-free assets and weaken market risk appetite for growth assets and crypto assets.
AI chip stocks retreated, dragging down risk sentiment.
The pullback in tech stocks is also amplifying market pressure. The report noted that the South Korean KOSPI index fell by more than 10%, with chip stocks such as Samsung Electronics and SK Hynix experiencing significant sell-offs, prompting the market to reassess the return on investment in AI infrastructure.
This pressure subsequently spilled over into the US market. Nvidia fell by about 5%, and other AI-related stocks generally came under pressure as well. Following the weakness in the technology sector, investor sentiment became more cautious overall, and risk assets suffered a similar setback.
Progress on US crypto legislation slows
In addition to macroeconomic factors, the crypto market has also been affected by delays in regulatory progress. The US Senate has postponed the passage of the CLARITY Act, which was originally seen as helping to provide a clearer regulatory framework for the digital asset market.
The delay in the bill has weakened market expectations for short-term regulatory clarity and given institutional funds new reasons to remain cautious. However, judging from the current market performance, legislative progress is not the only major factor in this round of decline; greater pressure still comes from interest rate expectations and the correction in technology stocks.
The market awaits a statement from the Federal Reserve.
Going forward, the market will focus on the outcome of the Federal Reserve meeting and its statement on the future path of interest rates. If the policy stance is more hawkish than expected, it may continue to suppress Bitcoin and high-risk assets; if interest rates remain unchanged and the wording is relatively dovish, short-term selling pressure may ease.
