Bitcoin has dropped—taking the rest of the crypto market with it—as traders de-risked ahead of the Federal Reserve’s Wednesday announcement where the central bank is expected to continue to hike interest rates.
The biggest digital asset by market cap is trading for $22,787, down 4.4% in 24 hours, according to CoinGecko.
Ethereum, the second biggest cryptocurrency, has shed nearly 6% of its value, priced at $1,551.
And of the biggest coins and tokens, Solana has been hit the hardest: it’s down 10% in the past day, currently trading hands for $23.57.
The crypto market is following U.S. equities (as it typically does)—and stocks have been hit hard today. The S&P500 is down 45 points, or 1.1%, to 4,025; the tech-heavy Nasdaq has dropped 198 points, or 1.7%, to 11,423.
Traders are shifting “risky” assets because the Federal Reserve is this week expected to continue its aggressive monetary policy in order to get inflation under control in the U.S.
The Fed last year raised interest rates seven times, making risky assets—assets that can be volatile, like Bitcoin or tech stocks—less attractive. Investors instead retreated to greenbacks, and today the U.S. dollar experienced gains: the U.S. Dollar Index was up 0.32% Monday.
America’s central bank started off last year aggressively upping interest rates by 75 basis points four times. But it then slowed down by raising rates by only 50 basis points. Market analysts expect an even smaller increase this time around, with most predicting a rate hike of 25 basis points. Higher interest rates make borrowing more costly and mean that people eventually spend less.
Bitcoin, meanwhile, had been on a roll lately: the asset started January in the green and has continued to move upwards in price. It’s up 37% in the last 30 days and more than 9% in the last two weeks alone.
But some experts have said its recent run could be a false signal known as a “bull trap,” where traders buy an asset when it touches above a resistance level—only to get hurt when it again retreats in price.
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Read More: Bitcoin, Ethereum Prices Fall as Market Braces for More Fed Rate Hikes