Cryptos Muted Even As Markets Anticipate A Softer CPI

Cryptocurrencies are trading on a subdued note even as markets anticipate a cooling in inflation in the month of August. Despite the Federal Reserve’s recent focus on the unemployment situation markets still perceive inflation to be a key determinant of the Fed’s monetary policy dynamics.

In data to be released on Wednesday morning by the U.S. Bureau of Labor Statistics, headline annual inflation is seen declining to 2.6 percent from 2.9 percent in July, 3 percent in June and 3.3 percent in May. The core component thereof which excludes the volatile food and fuel component is however seen steady at 3.2 percent. It was 3.3 percent in June and 3.4 percent in May.

On a month-on-month basis, the headline inflation is seen steady at 0.2 percent. It was 0.2 percent in July, -0.1 percent in June and 0 percent in May. On a core basis also, the month-on-month reading is seen at 0.2 percent. The same was 0.2 percent in July, 0.1 percent in June and 0.2 percent in May.

With the upcoming FOMC just a week away, expectation of a rate cut of 25 basis points has firmed up to 71 percent from 66 percent a day earlier. On the contrary, expectation of a rate cut of 50 basis points has weakened to 29 percent from 34 percent a day earlier.

Rate cut expectations reflected in the Dollar’s movements as well. The 6-currency Dollar Index is currently at 101.40 versus 101.63 at the previous close.

The market’s anticipation comes amidst the Fed’s recent comments that hinted at a shift in focus from inflation combat to supporting the labor market. Despite expectation of a rate cut in September, overall crypto market capitalization has decreased 1.2 percent overnight to $1.99 trillion.

Bitcoin shed more than a percent overnight to trade at $56,535.40, around 23 percent below the all-time high. BTC has lost 0.13 percent in the past week while holding on to gains of a little less than 34 percent in 2024. The original cryptocurrency traded between $58,029 and $56,112 in the past 24 hours.

Data from Farside Investors on Bitcoin Spot ETF products in the U.S. showed a net inflow of $117 million on Tuesday, rising from $29 million a day earlier. Fidelity Wise Origin Bitcoin Fund (FBTC) topped with inflows of $63.2 million. Grayscale Bitcoin Mini Trust (BTC) also recorded net inflows of $41.1 million. Ark 21Shares Bitcoin ETF (ARKB) also received inflows of $12.7 million. No other ETF recorded any flows on Tuesday.

Ethereum dropped 1.4 percent in the past 24 hours to trade at $2,315.92, around 53 percent below the previous peak. Weekly losses exceed 3.3 percent whereas gains in 2024 have decreased to 1.5 percent. Ether traded between $2,398.5 and $2,320.2 in the past 24 hours.

Data from Farside Investors on Ethereum Spot ETF products in the U.S. showed a net inflow of $11.4 million on Tuesday as compared with a net outflow of $5.2 million on Monday. Net inflows were last recorded on August 28. Fidelity Ethereum Fund Fidelity (FETH) recorded inflows of $7.1 million followed by iShares Ethereum Trust (ETHA) that recorded inflows of $4.3 million.

4th ranked BNB (BNB) slipped 1.76 percent overnight to trade at $511.52.

5th ranked Solana (SOL) declined 2.9 percent overnight but is holding on to gains of 1.3 percent in the past 7 days. SOL is currently trading at $130.96.

7th ranked XRP (XRP) lost 1.3 percent overnight and 3.6 percent in the past week to trade at $0.5321. The cryptocurrency issued by Ripple Labs is grappling with year-to-date losses of more than 13 percent.

8th ranked Dogecoin (DOGE) shed 3.7 percent overnight to trade at $0.1001.

9th ranked Toncoin (TON) edged down 0.24 percent overnight. TON is currently trading at $5.24.

TRON (TRX) ranked 10th overall has declined 0.3 percent in the past 24 hours to trade at $0.1525.

21st ranked Internet Computer (ICP) topped overnight gains among the top 100 cryptocurrencies with a surge of 8.1 percent despite macro-economic concerns weighing on broader market sentiment. Enthused by Apple’s foray into Artificial intelligence, the AI & Big Data category market capitalization has outperformed the broader market with lower overnight losses of 0.8 percent.

35th ranked Aave (AAVE) followed with gains of more than 7.7 percent.

48th ranked dogwifhat (WIF) is the greatest laggard, shedding 8.4 percent overnight. 98th ranked Popcat (POPCAT) followed with losses of more than 7 percent in the past 24 hours. Meme category cryptocurrencies have erased 3.8 percent in market capitalization over the past 24 hours. All the meme cryptocurrencies ranked among the top 100 are trading deep in the red.

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