Yahoo Finance Bitcoin price dips below $17,000 as investors eye Fed rate meeting
Bitcoin (BTC-USD) retreated below the $17,000 mark on Monday as investors look ahead to the last US Federal Reserve meeting of 2022 this week.
The crypto-ecosystem turned a sea of red on Monday, marching in lockstep with falling equity markets as traders tread with caution ahead of the latest reading for the US consumer price index (CPI) on Tuesday and the conclusion of the Federal Reserve's rate meeting on Wednesday.
Analysts polled by Reuters expect CPI to have risen by 0.3% in November, and economists expect the US central bank to raise interest rates by half a percentage point when the Federal Open Market Committee meeting concludes in Washington DC on Wednesday.
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Bitcoin fell to $16,933 on Monday, a drop of 1.4% in 24 hours. Ethereum (ETH-USD) slid 2.8% in the past week to $1,246.
Other altcoins fared even worse with Cardano (ADA-USD) dropping 6% in the past week to $0.30, and dogecoin (DOGE-USD) falling 16% in the past week to $0.087.
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The CoinDesk Market Index (CDI), which measures cryptos' performance, sank 850.92 points, down 1.89% in the past 24 hours.
Most analysts, investors and economists are predicting the Federal Reserve will raise interest rates by 50 basis points, which would signal a slowing of successive interest rate hikes.
This would see the Fed take a less restrictive approach to its monetary policy, likely leading to a boost in equity markets such as the NASDAQ (^IXIC), which bitcoin tends to correlate positively with.
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On Monday, the pan-European Stoxx 600 (^STOXX) was down 0.6% in early trade, and Bitcoin again revealed its tendency to march in lockstep with the price movements of global equity markets, as well as reacting sensitively to inflation readings.
Jeffrey Roach, chief economist at LPL Financial, told Reuters: "Easing producer prices foreshadow an improving inflation environment.
"The Fed will likely downshift the pace of rate hikes next week and should continue to downshift in 2023. However, the monthly increase in producer prices illustrates the need for continued tightening."
The slowing pace of rate hikes in the US has historically created more buoyant markets — bitcoin correspondingly reacts with a positive price movement.
