WASHINGTON (dpa-AFX) - Cryptocurrencies are trading in the red amidst renewed fears of an AI bubble exacerbating the market's gloom that followed the Fed's pronouncements. The Fed's hints of just one rate cut in 2026 and the disappointing forward guidance by cloud-computing giant Oracle dampened crypto market sentiment. Overall crypto market capitalization has declined more than 2 percent in the past 24 hours.
The Federal Reserve on Wednesday lowered the target range for the federal funds rate by 0.25 percentage point to 3.5 to 3.75 percent. The Fed acknowledged the moderate pace of expansion in economic activity, the slowing job gains, the edging up of the unemployment rate as well as the increase in inflation and its continuation at elevated levels.
The Federal Open Markets Committee also said it would initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis.
In the Summary of Economic Projections, the Fed has raised the GDP growth projection for 2025 to 1.7 percent from 1.6 percent projected in September and 1.4 percent projected in June. The Fed retained the unemployment rate projection for 2025 at 4.5 percent.
Acknowledging the easing price pressures, the Fed has in its projections lowered the median PCE inflation in 2025 to 2.9 percent from 3 percent projected in September. The core component thereof has also been lowered to 3 percent from 3.1 percent projected in September.
Significantly, the Fed has not made any changes to its projections of the appropriate policy path. Accordingly, the current median rate of 3.6 percent is expected to be reduced to 3.4 percent by the end of 2026, implying just one quarter-percentage cut in 2026.
The CME FedWatch tool shows the likelihood of a quarter percentage rate cut that would slash the target funds rate to 3.25-3.50 percent at 19.9 percent in the January 2026 FOMC. The probability of this action increases to 39.3 in the March FOMC. For the Fed meetings scheduled in April and June, markets have assigned an equal probability of 42 percent for Fed rates to fall to 3.25-3.5 percent.
Aggregate crypto market capitalization has decreased 2.3 percent overnight to $3.08 trillion. While 76 of the top 100 cryptocurrencies are trading with overnight losses of more than a percent, only 4 are trading with overnight gains of more than a percent.
Bitcoin has slipped 2.2 percent in the past 24 hours to trade at $90,304.89. The current price is around 28 percent below the all-time high of $126,198.07 recorded on October 7. The original cryptocurrency has shed almost 3 percent in the past week and is still saddled with losses of 3.3 percent on a year-to-date basis.
Ethereum dropped 3.7 percent overnight to trade at $3,197.10. The leading alternate coin is still trading 35 percent below the all-time-high of $4,953.73. Ether's year-to-date losses now exceed 4 percent.
Market leader Bitcoin traded between $94,477.16 and $89,459.73 during the past 24 hours while leading alternate coin Ethereum ranged between $3,446.62 and $3,170.86 during the same time period.
Bitcoin is currently ranked 9th rank and Ethereum 38th rank in the global ranking of all assets as per market capitalization published by companiesmarketcap.com.
4th ranked XRP dropped 2.5 percent overnight dragging its current trading price to $2.01.
5th ranked BNB declined 2.4 percent overnight resulting in price decreasing to $867.76.
The price of 7th ranked Solana tumbled 4.6 percent overnight to $130.92.
TRON ranked 8th overall added 0.42 percent overnight and is currently changing hands at $0.2804.
9th ranked Dogecoin plunged 5.4 percent overnight and is currently trading at $0.1381.
10th ranked Cardano plummeted 8.6 percent overnight to trade at $0.4236.
42nd ranked MemeCore (M) topped overnight gains among the top 100 cryptocurrencies with a gain of almost 4 percent.
74th ranked Pudgy Penguins (PENGU) topped overnight losses among the top 100 cryptocurrencies with a decline of 10.3 percent.
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