After an increase in interest rates, the cryptocurrency market plummets to yearly lows.

Following the US Federal Reserve’s decision to hike interest rates to their highest level in nearly 15 years on Thursday, the price of bitcoin and the larger cryptocurrency market fell very close to yearlong lows.Although the Bank of England is also set to raise rates on Thursday, the interest rate increase was widely anticipated, indicating that the decline in the cryptocurrency market was not as severe as some analysts had predicted.According to some forecasts by Federal Reserve experts, the rate increases may continue into next year as a response to rising inflation levels. Due to the fact that individuals and businesses tend to borrow less, invest less, and save more, this would probably have a negative effect on the price of cryptocurrencies as well as the stock market.

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According to Marcus Sotiriou, an analyst at the digital asset broker GlobalBlock, “rising rates is bad for crypto since it means that it becomes more expensive to borrow because loan payments are greater and thus it entices people to save more.””In addition to the Federal Reserve’s decision, there are two other important announcements on Thursday: the US Conference Board Leading Index and the Bank of Japan’s and Bank of England’s interest rate decisions. We may consequently expect a very erratic week as markets become more aware of central banks’ decisions.

Over the past week, the total value of the cryptocurrency market has decreased by around $100 billion, dropping below $900 billion for the first time since July.After Ethereum, the second-most valuable cryptocurrency in the world behind bitcoin, finished its long-awaited Merge, which reduced its energy consumption by more than 98%, there was a small uptick last week.

But with Ethereum’s token ether (ETH) down roughly 20% over the past week, any dreams for long-term gains were dashed.Even while some analysts are optimistic that the trajectory will be more positive in the long run, further interest rate increases will probably cause further turbulence in the crypto market in the short term.The Nasdaq, the second-largest American stock exchange by market cap, is launching a digital assets business that is targeted at institutional investors, according to Mr. Sotiriou. “Despite the unstable market conditions, traditional finance institutions continue to enter the space,” he said.

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