Bitcoin Drops as The Fed Winds Up Another Interest Rate Hike

Crypto markets were wobbling as the Federal Reserve's two-day policy meeting started on Tuesday. Bitcoin suffered its biggest single-day percentage fall in more than two months, sliding 4.5% to trade at around $22,600. 

Investors are keenly watching central bank policy decisions and how they affect the risk of recession, both of which remain real headwinds for crypto and other risk assets.

The Fed is expected to raise rates by 25 basis-points on Wednesday, its smallest increase in nearly a year. Markets will listen closely to Fed Chair Jerome Powell regarding any economic projections or guidance on future rate hikes he may give out.

Some crypto proponents argue that price action before the central bank's meeting is more speculative and not grounded in macro-level news, stating that any movement ahead of the Fed meeting is mere correlation.

With the industry having withstood a deep winter and the demise of household names Terra Luna and FTX, the most positive analysts believe that speculators have been flushed out and crypto is on a more secure footing.

It has been a difficult year for digital assets, one that may have broken the industry during its early years. Bitcoin and Ethereum are down more than 66% from record highs in November of 2021 and markets have been preoccupied by macroeconomic concerns. Still, Bitcoin is stubbornly hovering at recently established support levels, no matter the headwinds it faces.