The latest moves in crypto markets, in context By Jamie Crawley, CoinDesk News Reporter Was this newsletter forwarded to you? Sign up here. |
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Welcome to a new week! Here’s what you need to know in crypto today. |
Bitcoin falls below $59,000 following the weekend rally.Ether drops 4.5% to lead losses among crypto majors.Traders are split on the size of the impending rate cut. |
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CoinDesk 20 Index: 1,822.90 -3.32% Bitcoin (BTC): $58,779.97 -1.93% Ether (ETH): $2,302.66 -4.24% S&P 500: 5,626.02 +0.54% Gold: $2,580.54 +1.47% Nikkei 225: 36,581.76 -0.68% |
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Bitcoin sank below $59,000 having spent much of the weekend above the $60,000 mark. BTC traded around $58,550 in the European morning, a drop of 2.4% over 24 hours at the start of a week in which traders worldwide expect the Federal Reserve to make its first interest-rate cut in more than four years. The broader digital asset market as measured by the CoinDesk 20 Index (CD20) is 3.6% lower. Crypto markets were buoyed by favorable U.S. economic data on Friday, which sparked a short-term rally. Bitcoin ETFs saw inflows of over $263 million, their highest since July 22, while the ether equivalents added around $1.5 million. |
Ether led losses among major cryptocurrencies, sliding 4.5% in 24 hours. Cardano’s ADA fell 5% and Solana’s SOL declined 4%, while BNB Chain’s BNB was the best performer slipping just 1.1%. Futures traders betting on higher prices lost over $143 million amid the sudden drop, CoinGlass data shows. Elsewhere, the widely watched BTC/ETH ratio, which tracks the relative movements of the two largest tokens, fell to four-year lows. Ethereum as a protocol has had some serious competition in the last year with Solana looking to be the destination of choice to launch memecoins and new chains like Coinbase's Base and Telegram-affiliated TON capturing more mindshare, which has probably hit demand for the Ethereum blockchain's native token. The Fed is widely expected to announce an interest-rate cut on Sept. 18, kicking off the so-called easing cycle. Traders, however, are split on the size of the cut, setting the stage for a potential volatility explosion in financial markets after the decision. At press time, the Fed funds futures showed a 41% chance of the Fed reducing rates by 25 basis points (bps) to the 5%-5.25% range and a 59% probability of a bigger 50 bps reduction to the 4.7%-5% range. The stalling of bitcoin's upward momentum following its recovery from below $53,000 could be attributed to the uncertainty over the size of the impending rate cut. |
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Market Insight: Will the Fed Cut Rates by 25 or 50 Basis Points? |
Observers have noted the rarity of how evenly divided predictions over the size of the Fed's likely rate cut are. Early Monday, opinion was seemingly split down the middle between 25 and 50 basis points. "Rarely has the market gone into the Fed meeting with maximum uncertainty (halfway between 25 bps and 50 bps)," Marc Chandler, chief market strategist at Bannockburn Global Forex told CoinDesk in an email. "I suspect a 50 bps cut would not be good for risk assets on ideas that the Fed is more concerned about the economy." Several analysts have warned that a 50 bps cut could signal panic, denting demand for riskier assets. The probability of a 50 bps cut rose last week after Wall Street's Journal's Nick Timiraos published an article the size of the rate cut was up for debate. "The market took the bait and ratcheted up the odds of not only one, but two half-point cuts and a quarter-point cut in the three remaining meetings of the year," Chandler said, adding that traders should also keep an eye on the Fed's summary of economic and interest rate projections. The odds didn't stay evenly split for long. Later in the European morning, CME Feds Funds Futures were showing a 59% chance for a 50 bps cut, and just 41% for 25 bps. |
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The chart illustrates how the last Fed rate-cutting cycle spurred a bitcoin surge to then all-time high levels around $70,000.Its more recent bull market jump came after the Fed ceased increasing rates, since when BTC has trod water, seemingly awaiting the next rate-cutting cycle. Source: Bloomberg, ETC Group |
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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