The Federal Reserve's recent decision to hold interest rates steady has sent shockwaves through the crypto market, triggering a wave of liquidations and heightened volatility. The central bank's reluctance to introduce rate cuts has left investors reeling, with nearly $400 million in liquidations over the past two days.

The FOMC's Rate Cut Conundrum

The Federal Reserve had previously promised to introduce three rate cuts for 2024, but has since scaled back that promise to just one. This U-turn has left investors questioning the central bank's commitment to taming inflation. Despite the FOMC's efforts to anchor high inflation, commodity prices and employment rates continue to spiral out of control.

Crypto Market in Chaos

The crypto market has been particularly hard hit, with Bitcoin plummeting from $70,000 to $66,000 and Ethereum slipping from $3700 to $3400. Other altcoins, including Cardano, Solana, and Ripple, have also taken a hit, dropping at least 8%. The US spot Bitcoin ETFs have seen net outflows of $200 million, ending their record 19-day streak of net inflows.

A Lack of Investor Confidence

Despite a brief lift from the US CPI report, which came in cooler than expected, the market quickly returned to its initial levels, underscoring a persistent lack of investor confidence. Bitcoin, which had surged to $70,000 following the CPI news, was trading under $68,000 at press time.

A Glimmer of Hope

However, a Grayscale-backed survey suggests that 41% of US voters are paying more attention to Bitcoin due to the US' persistent inflation. This increased interest could potentially boost the crypto market in the long run.

Why This Matters

The FOMC meeting is notorious for moving the market, and the crypto market is no exception. Investors carefully analyze each meeting to assess the current US economic landscape and make investment decisions accordingly. Rate cuts are often viewed as positive developments because they provide investors with leeway to borrow capital and consider investments in higher-risk assets such as cryptocurrencies.