Cryptocurrencies are mostly in the red today, hampered by the prospect of global monetary tightening and cooling in the hype of the Ethereum Merge upgrade and Terra tokens over their tax burn plan. The global crypto market cap today has fallen below the $1 trillion mark, a decline of over 4% in the last 24 hours at $974 billion.
Meanwhile, the total volume in DeFi currently stands at $3.77 billion, which is 8% % of the total crypto market 24-hour volume. Also, the volume of all stablecoins is now at $42.91 billion, which is 91.02% of the total crypto market 24-hour volume.
For now, most cryptos seem likely to continue their vulnerability to the same macroeconomic forces that have been affecting stocks and other riskier assets for months.
What you need to know
Last week, Bitcoin and other cryptos began sinking after a disappointing Consumer Price Index (CPI) indicated that the U.S. central bank was far away from taming inflation. Again, investors will be closely eyeing the Federal Open Market Committee’s (FOMC) decision on a fresh interest rate hike this week, although a minimum 75 basis point increase is widely expected – a continuation of the Fed’s monetary hawkishness.
The World Bank also recently noted that central banks’ interest rate increases could push the global economy into recession in 2023. As a result, the S&P 500 and the Nasdaq Composite index suffered their worst weekly performance since June.
Goldman Sachs has cautioned that aggressive rate hikes could trigger a 26% fall in the S&P 500. If the correlation between the equity markets and cryptocurrencies continues, it could bring more pain to the markets, especially in the face of a recession.