The price of Bitcoin, Ethereum, and other major cryptocurrencies slumped on Monday as the Federal Reserve is expected to increase its benchmark interest rate by 0.75%.
At the time of writing, Bitcoin slid to a weekly low of about $21,935, down 2.8% over the past 24 hours.
Ethereum, the market’s second-largest cryptocurrency, shed nearly 5% for the day to the current value of $1,528.
Cardano was the heaviest hit among the top ten cryptocurrencies with a drop of almost 7% over the day, followed by Solana (-4.35%), Dogecoin (-4.4%), and XRP (-4.15%).
The latest price action comes ahead of the two-day long Federal Reserve meeting kicking off on Tuesday.
The meeting is expected to be wrapped up with the U.S. central bank raising interest rates by another 75 basis points.
Fed officials have already upped benchmark short-term borrowing rates by 1.5% this year, including a 75 basis point increase in June—the largest such increase in nearly three decades.
When the federal funds rate goes up, this impacts the entire economy: adjustable-rate mortgages, home equity lines of credit, credit cards, student debt, and savings deposits, and other loans are becoming more expensive.
The idea is that less accessible borrowing will dampen consumer demand, thus bringing inflation down.
Interest rate hikes could also play out on stocks, cryptocurrencies, and other risky investments, while bringing risks of a decrease in capital inflows and, ultimately, a decline in economic growth.