#OnChainLendingSurge The Federal Reserve, economic data, and market psychology shake the king of cryptocurrencies

Bitcoin's reign as the most valuable cryptocurrency has taken a hard hit. Its price, which had reached historical levels, has experienced a significant drop, falling to $92,500. But what has triggered this sharp correction? Eyes turn to the Federal Reserve, whose moves in monetary policy and solid economic data from the United States have generated an explosive cocktail that has shaken the foundations of the crypto market.

The iron fist of the Federal Reserve

The Federal Reserve, the central bank of the United States, plays a crucial role in the global economy. Its decisions on interest rates and the amount of money in circulation have a direct impact on financial markets. In this case, the expectation of an increase in interest rates has generated a greater aversion to risk among investors. Why? A higher interest rate environment makes low-risk assets, such as government bonds, more attractive. As a consequence, investors tend to shed more volatile assets like cryptocurrencies in search of safe havens.

Solid economic data: A blessing or a curse?

The solid economic data from the United States, although at first glance may seem positive, have added pressure to the cryptocurrency market. Strong economic growth is usually accompanied by a tightening of monetary policy by the Federal Reserve. This means that financial conditions become more restrictive, which can negatively affect risk assets like Bitcoin. Additionally, the strength of the U.S. economy can cause the dollar to appreciate, which in turn puts downward pressure on the price of cryptocurrencies, which are usually denominated in dollars.

So the market psychology is:

Fear and uncertainty?