Dovish Fed Hints Lift Crypto Market

Cryptocurrencies rallied in the past 24 hours amidst hints in recent FOMC minutes that revealed a Fed inclined to cut rates should incoming data support. The downward revision to labor data by the U.S. Bureau of Labor Statistics also boosted crypto market sentiment. Hopes of a more dovish stance by Fed Chair Jerome Powell at the Jackson Hole Symposium on Friday also supported crypto market momentum.

Minutes of the July FOMC released on Wednesday showed that the vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting which was scheduled for September. The participants also viewed the incoming data as enhancing their confidence that inflation was moving toward the Committee’s objective.

Most participants of the FOMC also acknowledged the importance of communicating the Committee’s data-dependent approach. The remarks by FOMC participants that the risks to the employment goal had increased and that the risks to the inflation goal had decreased assumed significance in the light of the downward data revision by the U.S. Bureau of Labor Standards.

The Bureau of Labor Statistics on Wednesday announced a preliminary estimate of the annual benchmark revision to the establishment survey employment series. Accordingly, the non-farm payrolls for the year ended March 2024 were revised downwards by more than 800 thousand. The more-than-expected weakness in the labor market renewed expectations that the Fed would indeed start easing in September.

The CME FedWatch Tool that tracks the expectations of interest rate traders currently shows a probability of 69.5 percent for a 25-basis points rate cut in September. It was 62 percent a day earlier and 75 percent a week earlier. Expectations of a rate cut of 50 basis points in the Fed’s rate decision due on September 18 stands at 30.5 percent versus 38 percent a day earlier and 25 percent a week earlier.

The Fed Chair’s Jackson Hole speech on Friday assumes significance in the context of the FOMC’s data dependent approach as well as the downgrade to the revised job markets data.

With a broad-based momentum in crypto markets, the overall crypto market capitalization has increased 2.4 percent overnight to $2.15 trillion, from $2.09 trillion a day earlier. Meme crypto market capitalization increased 3.1 percent in the past 24 hours whereas the AI & Big data category recorded an overnight surge of more than 5.4 percent in market capitalization.

Bitcoin rallied more than 3 percent overnight to trade at $60,947.20, around 17 percent below the all-time high. Weekly gains are close to 4.3 percent whereas losses over the 30-day horizon have reduced to 9.4 percent. Gains in 2024 have also increased to 44 percent.

Bitcoin Spot ETF products in the U.S. witnessed inflows falling to $39.5 million from $88 million a day earlier.

Ethereum too bounced 2.2 percent in the past 24 hours to rise to $2,629.71, around 46 percent below the previous peak. Ether has edged on a weekly basis while losses over the 30-day horizon have reduced to 24 percent. Gains in 2024 have also increased to a little more than 15 percent.

Ether Spot ETF products in the U.S. saw outflows rising to $18 million from $6.5 million a day earlier.

With a market capitalization of $1.20 trillion, Bitcoin dominates more than 56 percent of the overall crypto market. Ethereum which enjoys a market cap of $316 billion follows with a market share of 14.7 percent. With a market capitalization of $177 billion, the market share of stablecoins is close to 8.2 percent.

4th ranked BNB (BNB) rallied more than 4 percent overnight. BNB is currently changing hands at $576.46 implying year-to-date gains of more than 84 percent.

5th ranked Solana (SOL) added 1.3 percent overnight to trade at $142.98. SOL has added more than 40 percent in 2024.

The overnight addition of 0.72 percent helped 7th ranked XRP (XRP) rise to $0.5996, recording weekly gains of 5.7 percent. Nevertheless, the cryptocurrency is still grappling with losses of 2.50 percent on a year-to-date basis.

8th ranked Toncoin (TON) slipped 2.1 percent in the past 24 hours to trade at $6.51.

9th ranked Dogecoin (DOGE) gained 2.5 percent on an overnight basis to trade at $0.1061.

10th ranked TRON (TRX) slipped 5.9 percent overnight and is currently changing hands at $0.1544.

55th ranked Fantom (FTM) topped overnight gains among the top 100 cryptocurrencies with a surge of more than 14 percent. 19th ranked Polygon (MATIC) and 80th ranked Beam (BEAM) followed with gains of more than 10 percent.

10th ranked TRON (TRX) lagged the most among the top 100 cryptocurrencies with a decline of 5.9 percent. 60th ranked Helium (HNT) followed with losses of more than 5.3 percent.

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