Bitcoin has dropped to around $21k as investors prepare for a two-day Fed meeting starting on Tuesday.
The world's preeminent cryptocurrency started the week in a downward tumble, BTC (USD-BTC) now sits at $21,100 as of the time of writing, falling from over $24,100 one week ago.
Ethereum (USD-ETH) has dropped by 10% to sit at $1,419 as of the time of writing.
Among the major blue-chip crypto assets, Solana (SOL-USD) is the heaviest hit with a drop of over 7% in the past day, followed by Dogecoin (DOGE-USD) which is down 5.7%, and Cardano (ADA-USD) which is down 5.2%.
Most digital assets are a sea of red today, but the cryptocurrency market has held above $1tn.
As the total cryptocurrency market capitalisation dropped by nearly 5%, millions of dollars worth of long positions were liquidated in the past 24 hours.
In the past day, 74,087 traders were liquidated, with total liquidations across the market as a whole coming in at $209.43 million.
Read more: Crypto live prices
The downward price action comes as investors move to risk-off mode ahead of the two-day long Federal Reserve meeting that begins on Tuesday.
The Federal Reserve is expected to conclude the meeting with the US central bank by raising interest rates by another 75 basis points.
The US central bank has already increased the benchmark short-term borrowing rates by 1.5% this year, including a 75 basis point increase in June.
This is the largest rate increase in nearly three decades and is aimed at curbing the inflation of the US dollar.
Bitcoin is expected to behave as a hedge against inflation, but has been correlating with tech stocks and is particularly sensitive to a decrease in disposable income of retail investors.
The knock-on effect of raising the interest rate impacts the entire economy, with adjustable-rate mortgages and other loans becoming more expensive.
The bitcoin mining difficulty level has experienced its most significant drop since July 2021.
On Friday, it dropped lower by approximately 5%, easing the competition among miners for rewards.
The drop in the difficulty level has made mining profitable even though the bitcoin price has been falling.
It has been estimated that mining bitcoin is still profitable above the $18,000 level, given current electricity prices.
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