Global markets and the cryptocurrency world are waiting for the interest rate decision and statements from the US Federal Reserve. Non-farm employment data from the US last Friday caused cryptocurrencies to experience serious declines. The fact that the US inflation data announced today was below expectations was interpreted positively by the markets at first and took back some of the declines. Now the eyes are turned to the Fed. So why are coins falling?

Non-farm employment did not meet expectations

The non-farm payrolls data released last week was strong enough to shake the markets. The better-than-expected data showed that the US economy is moving ahead unabated. This has raised concerns that the Federal Reserve (Fed) may keep interest rates higher for longer than expected.

High interest rates encourage outflows from cryptocurrencies, which are often risky assets, as investors may opt for safer, fixed-income assets.

The dot-plot chart, which will be released after the Fed’s meeting tonight, will show Fed members’ forecasts for interest rates. Markets will shape their short and long-term interest rate expectations in line with the forecasts in this chart.

Inflation data below expectations

US Consumer Price Index (CPI) came in lower than expected on Wednesday. Headline inflation was announced as zero on a monthly basis, while annual inflation was realized as 3.3%. The expectation of economists surveyed was 3.4%. We can say that these data were interpreted that the Federal Reserve (Fed) may be more cautious about raising interest rates.

Why are coins falling?

So why are coins falling as a result? We can say that these sharp declines in cryptocurrency markets, the uncertainties created by the higher-than-expected non-farm payrolls data, the uncertainty created by the inflation data to be announced this week, and the FED’s announcements this evening are the main factors in the declines.

Fed statements

The long-awaited Fed’s interest rate decision and the remarks by the chairman Jerome Powell will be decisive for the markets. The dot-plot chart that will be published after the Fed’s rate decision will show the Fed members’ forecasts for interest rates. These forecasts could have a significant impact on cryptocurrency markets as they shape investors’ short and long-term interest rate expectations.