In the hours leading up to the next Federal Reserve meeting, investor pessimism has hit Bitcoin and Ethereum hard.

At the time of writing, BTC has dropped 7.6% and ETH is down 6% over the past 24 hours. The Bitcoin price is hovering around $57,000, while the Ethereum price is stuck at just under $2,900, according to data from CoinGecko.

The volatility has been hellish for derivatives traders. In the past 24 hours, $457 million worth of crypto futures positions have been liquidated, according to CoinGlass. And no big surprise, $392 million of those were long contracts.

Traders opening futures contracts are essentially placing bets on future price action. To be long on an asset is to bet the price will go up. And to be short on it is to bet it'll go down.

And it's not just blue chips like Bitcoin and Ethereum that have been impacted. Sagging prices have been widespread throughout the market. In fact, out of the whole top 100 cryptocurrencies by market capitalization on CoinGecko, just a few assets have escaped the sea of red, barring stablecoins that have managed to maintain their pegs, such as Tether (USDT) and Circle's USDC.

The U.S. Federal Open Markets Committee will publish its interest rate decision at 2 p.m. Eastern Time today, with Fed Chair Jerome Powell scheduled to speak at a press conference at 2:30 p.m.. Back in February, investors seemed certain that May would be the month that the FOMC finally cut interest rates—which is usually a bullish sign for risk assets like Bitcoin.

That's because lowered interest rates usually coax traders out of U.S. Treasuries to chase gains in riskier assets, like equities and crypto assets.

The Fed's key interest rate currently stands at a high of 5.25% to 5.5% and has been unchanged since July 2023 as the central bank aims to curb inflation. Policymakers have been keeping a close eye on inflation, which is currently 3.5%, in hopes to get it closer to 2% before considering rate reductions. But that's becoming a distant hope, as last month inflation increased to the highest it's been since September.

Traders had a small jolt of hope in March, when the Swiss Central Bank announced it was cutting interest rates. “For some months now, inflation has been back below 2% and thus in the range the SNB equates with price stability,” the central bank wrote in its decision at the time. But it seems the sentiment in Switzerland hasn't spread to other major central banks.

Just a month ago, traders seemed certain that the Fed might lower interest rates in June, according to the CME Fed Watch tool. But sentiment has soured. Traders don't expect to see the Fed ease interest rates until December—and even then it's just a 75% majority that seem to feel that way.