Bitcoin slides to 3-month low and could fall further

The US Federal Reserve´s (Fed) rate decision weighed on Bitcoin and cryptocurrencies alongside other risk assets and added downward pressure on digital assets. Total market capitalization rises marginally above $900 billion, while the queen of digital currencies extended recent lows to $18,290, and sends fresh signals that it is poised to test recent lows at $17,500.

"We see some near-term support around $18,250-$18,500, but the key test is around $17,500," noted Craig Erlam, analyst at Oanda. "A move below this figure could signal a further downward spiral, with next support around $16,000," he added. Ethereum, meanwhile, also left a new two-month low at $1,230 on Wednesday. "Its technical aspect is complicated and we do not rule out seeing an extension of the falls, since its main trend is clearly bearish and for weeks it has been making declining highs," stated César Nuez, analyst at Bolsamanía. And he warned that "an extension of the falls to the annual lows reached in June at $876 is very likely".

The members of the Federal Open Market Committee (FOMC) of the US central bank raised interest rates by 75 basis points three times in a row, indicating how serious inflationary pressures have become in the United States. Clearly, the cryptocurrency market in general does not like it.

Given that inflation is causing the Fed to raise interest rates, inflation-related economic data has been very significant for the cryptocurrency market.

Because of this, cryptocurrencies have recently responded negatively to the Fed's rate hike report. For example, after the U.S. Bureau of Labor Statistics reported August inflation data, Bitcoin prices fell 5% and Ethereum prices plummeted 7% in the following 24 hours.

Despite the tumultuous market conditions, traditional financial institutions continue to enter the space, as Nasdaq, the second largest U.S. exchange by market capitalization, is launching a digital asset business aimed at institutional investors. The goal will likely be to compete with the likes of Fidelity Digital Assets, Coinbase and Gemini, and is incredibly bullish for the entire space. This is yet another indication of institutional interest in the cryptocurrency market for the next 5-10 years.

The cryptocurrency market is currently also going through the Vasil update of the Cardano blockchain. The developers have met all the prerequisites for its successful deployment on September 22.