Fed’s Rate Cut Hints Fail To Cheer Crypto Markets

Cryptocurrencies shed more than 2 percent in the past 24 hours despite Federal Reserve holding interest rates steady and hinting at an increased likelihood of a rate cut in September. Poor response to the Spot ETF products as well as a resurgence in the Dollar Index also dampened crypto market sentiment.

The Federal Open Markets Committee on Wednesday noted that inflation has eased over the past year but remains somewhat elevated. It noted that in recent months, there has been some further progress toward the Committee’s 2 percent inflation objective. Also, job gains have moderated, and the unemployment rate has moved up but remains low.

Market expectations of an easing in September were reinforced by the Fed’s rate cut hints. According to the CME FedWatch tool that tracks the views of interest rate traders, the expectation of a rate cut of 50 basis points or more has increased to 13.5 percent now as compared with 11.9 percent a day earlier. As a result, expectations of a 25-basis points rate cut dropped to 86.5 percent from 88.1 percent a day earlier.

Markets also weighed the lackluster response to spot ETF products in the U.S. on Wednesday. Data from Farside Investors showed net inflows of $0.3 million to Bitcoin Spot ETF products as compared with net outflows of $18 million a day earlier. Ether Spot ETF products recorded an outflow of $77 million as compared with net inflows of $34 million on Tuesday.

The Dollar’s resurgence amidst escalating geopolitical tensions in the Middle East also swayed crypto market sentiment. The Dollar’s strength amidst safe haven demand and the pound’s decline that followed the rate cut by Bank of England lifted the 6-currency Dollar Index to 104.26 from 104.10 a day earlier.

Amidst the developments, overall crypto market capitalization declined close to 3 percent overnight to $2.32 trillion from $2.39 trillion a day earlier. None of the top 10 cryptocurrencies have recorded gains in the past 24 hours.

Only 3 of the top 100 cryptocurrencies have gained more than 1 percent on an overnight basis.

84th ranked AIOZ Network (AIOZ) topped overnight gains with a surge of 7.8 percent. The native token of the AIOZ Network, a decentralized platform for Web3 AI, storage, and streaming has gained 37 percent in the past week and 357 percent in 2024.

50th ranked Aave (AAVE) added 4.1 percent in the past week followed by 80th ranked Helium (HNT) that added 1.8 percent in the past 24 hours.

Bitcoin plunged to a low of $63,573.63 in the past 24 hours. It is currently trading at $64,525.93 recording overnight losses of 3.2 percent. BTC is holding on to gains of 1.6 percent in the past week and almost 53 percent in 2024. At its current price, the leading cryptocurrency is trading 13 percent below the all-time high recorded in March 2024.

Ethereum tumbled 5 percent in the past 24 hours to trade at $3,173.08, around 35 percent below the all-time high. Amidst weekly gains of 1.8 percent, the leading altcoin’s year-to-date gains are close to 39 percent. The broad-based market sell-off had dragged the altcoin to a low of $3,136.32 earlier in the trade.

Bitcoin increased its dominance to 55.1 percent of the overall crypto market whereas Ethereum’s share declined to 16.6 percent of the market. Amidst growing risk aversion, the market capitalization of the not-so-volatile stablecoins has increased to $172 billion or 7.4 percent of the overall crypto market.

4th ranked BNB (BNB) dropped 2.7 percent overnight to trade at $572.30. BNB is holding on to gains of 2.8 percent in the past week and 83 percent in 2024.

5th ranked Solana (SOL) tumbled 7.8 percent overnight to trade at $169.12. SOL has gained 1.9 percent in the past week.

6th ranked XRP (XRP) also plunged 6.6 percent overnight to trade at $0.6053. Despite gains of half a percent in the past week and 26 percent over the past 30 days, year-to-date losses still exceed a percent. XRP is the highest-ranking crypto to trade in the red on a year-to-date basis.

Dogecoin (DOGE), ranked 8th overall has also erased 6 percent in the past 24 hours and 2.5 percent over the past week to trade at $0.1195.

9th ranked Toncoin (TON)edged down 0.09 percent overnight to trade at $6.82. TON tops year-to-date gains among the top 20 cryptocurrencies with an addition of 183 percent.
10th ranked Cardano (ADA) declined 3.1 percent overnight. ADA is currently trading at $0.3908 having slipped more than 34 percent in the year 2024.

100th ranked Mog Coin (MOG) topped overnight losses with a decline of more than 20 percent. 46th ranked dogwifhat (WIF) shed 14.6 percent whereas 98th ranked Popcat (POPCAT) slipped 12.9 percent. 57th ranked THORChain (RUNE) also lost more than 10 percent in the past 24 hours.

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