WASHINGTON (dpa-AFX) - Anxiety about a hawkish forward guidance by the Fed dragged down cryptocurrency market capitalization more than 4 percent in the past 24 hours. Despite overwhelming expectation of a status quo on interest rates in the Fed's decision due to be announced on Wednesday, markets are eagerly waiting for the Fed's hints on the timing of the next interest rate cut. Unabated outflows from Bitcoin Spot ETF products in the U.S. as well as the Dollar's surge also dampened crypto market sentiment, exacerbating a sell-off in the top-ranked cryptocurrencies.
Anxiety about a hawkish Federal Reserve was primarily driven by mixed readings from the U.S. economy amidst the Fed's dual mandate of achieving maximum employment and stable prices. Among the key economic indicators that influence the Fed's decision, headline annual consumer price inflation has increased to 3.5 percent in March, from 3.2 percent in the previous month. The Fed's preferred PCE-based inflation has also increased to 2.7 percent in March, from 2.5 percent earlier. Unemployment rate which decreased to 3.8 percent in March, from 3.9 percent previously and the addition of 303 thousand to non-farm payrolls versus 270 thousand in February implied a robust labor market. GDP growth in the first quarter however softened to 1.6 percent, from 3.4 percent in the previous quarter, renewing rate cut hopes.
According to the CME FedWatch tool that tracks the expectations of interest rate traders, the probability for interest rates at the current level of 5.25% to 5.5% or higher is more than 90 percent for the next Fed review in June. Rate cut expectations grow higher from July and the probability of rates to continue at the current high-level falls to 76 percent. Likewise, only a 52-percent probability is expected for rates to remain at the current high level even after the FOMC in September. Only 40 percent probability is assigned for rates to remain at current levels in the review in November. For the December review, markets now assign only a 24 percent chance for rates to remain at the current level.
Amidst the anxiety, crypto market capitalization has dropped to $2.15 trillion, from $2.24 trillion a day earlier.
Among the top 100 cryptocurrencies, only around 20 cryptocurrencies are trading with overnight gains of more than a percent. 37th ranked Optimism (OP) gained 11.4 percent overnight whereas 29th ranked Cosmos (ATOM) has added 9.6 percent in the past 24 hours.
Likewise, only 5 among the top 100 cryptocurrencies are trading with weekly gains of more than a percent. 92nd ranked Helium (HNT) gained 27 percent in the past week followed by 68th ranked Wormhole (W) that recorded weekly gains of more than 12 percent.
April has been a disappointing month for cryptocurrencies despite the widely anticipated Bitcoin halving event. Overall crypto market capitalization slipped from $2.59 trillion to $2.12 trillion. Only 69th ranked Ethena (ENA) and 56th ranked Bitget Token (BGB) are currently trading with gains of more than a percent over the 30-day horizon. ENA has gained 17 percent whereas BGB has rallied 1.8 percent in the past 30 days.
Bitcoin has slipped 5.8 percent overnight to trade at $57,287.46, around 22 percent below the all-time high. The 24-hour trading range was between $61,509.76 and $56,555.29.
Data released by Farside Investors showed a net outflow of $161.6 million form Bitcoin Spot ETF products on Tuesday, versus a net outflow of $51.6 million on Monday. Ethereum also dropped 3.3 percent in the past 24 hours to trade at $2,888.54, almost 41 percent below the all-time high. Ether touched a high of $3,033.64 and a low of $2,815.92 in the past 24 hours.
4th ranked BNB (BNB) slipped 2.3 percent overnight and its current price is $548.35. The price movement comes amidst BNB's Changpeng Zhao receiving a four-month sentence which was a lighter sentence than the three years that the prosecutors were seeking to enforce.
5th ranked Solana (SOL) shed more than 3 percent overnight and is trading at $123.33.
7th ranked XRP (XRP) however edged up 0.3 percent overnight to change hands at $0.4959. XRP has however shed 7.9 percent in the past week and 19.4 percent in 2024. It is the highest-ranking crypto to trade with year-to-date losses.
8th ranked Dogecoin (DOGE) erased more than 7 percent overnight. The highest-ranking meme crypto is currently being traded at $0.1243.
9th ranked Toncoin (TON) declined 8.6 percent in the past 24 hours to trade at $4.73.
10th ranked Cardano (ADA) also rallied 2.1 percent in the past 24 hours to trade at $0.4389.
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