Bitcoin falls as investors await US interest rate rises - YAHOO FINANCE
Bitcoin fell below $19,000 (£16,745) as a cautious attitude arose ahead of this week's Federal Reserve interest rate decision.
The US central bank is forecast to persist with its rate hike increases until a peak of 4.26% in March 2023.
Investors are worried that aggressive monetary tightening measures could tip the US economy into a recession.
On Wednesday the Federal Reserve is expected to raise the interest rate by 75 basis points.
This could see a target federal funds rate of 3.0% to 3.25%, the highest level in 14 years.
On the eve of any announcement, Wall Street trader momentum took a cautious turn.
In the lead-up to Wednesday's meeting, the S&P 500 (^GSPC) closed for the third straight session below 3,900 points.
The benchmark S&P 500 index (.SPX) has dropped 19.1% since the beginning of 2023 and many financial commentators are forecasting a financial crash that could dwarf the last one, the sub-prime mortgage collapse of 2007-2008.
Economist Nouriel Roubini, recently argued the Federal Reserve might have to double interest rates to 5% in order to curb inflation.
Speaking at a recent eToro webinar Roubini said: "I worry about a stagflationary debt crisis, because you have the worst of the '70s in terms of supply shocks, and you have the worst of the global financial crisis because of too much debt, and that combination is dangerous.
"If you're behind the curve, eventually the recession is going to be more severe, the loss of jobs and income and wages is going to be more severe," he noted, referring to the Fed's rate hikes relative to inflation. "You need to be ahead of the curve."
Bitcoin (BTC-USD) mimicked falling US equities and dropped over 6% in the past week to $18,932, as of the time of writing.
Ethereum (ETH-USD) fell further after the merge to a proof of stake consensus mechanism of allegations the network was becoming more centralised.
As of the time of writing ether (ETH-USD) was down over 15% in the week to $1,329.
In a survey conducted by CNBC in September, the average respondent believed the Fed will hike the interest rate by 75 basis points. Rates are forecast to peak at 4.26% in March 2023.
The Federal Reserve seems to have doubled down on its commitment to raise rates and reduce the supply of money after consumer prices in August climbed to a hotter-than-expected 8.3%.
Less money, and the increase in the expense of borrowing, is a major factor in the reduction of retail investor spending that drove bitcoin to an all-time high in November 2021 of $68,000.