The global digital assets market is in turmoil as attention shifts to the U.S. Federal Reserve’s upcoming decisions. The cumulative market cap fell over 3% to $2.03 trillion, while 24-hour trading volumes surged by 42%, signaling increased market activity.
Bitcoin (BTC) dropped by 3%, sliding below the $59,000 mark after a brief relief rally over the weekend. Ethereum (ETH), the second-largest cryptocurrency, continued its downward trend, losing 6% in value. Meme coins, including Dogecoin (DOGE) and Shiba Inu (SHIB), also declined nearly 4% each, reflecting the broader market’s negative sentiment.
Anticipation builds ahead of Fed decision
Investors are on edge as they await a week packed with significant economic events. The release of August retail sales data on September 17 will kick off the week, followed by the highly anticipated Federal Reserve interest rate decision on September 18. Additional reports, such as the Philadelphia Fed Manufacturing Index and August’s existing home sales data, are also expected later in the week.
The Fed’s decision could be a turning point for risk assets like cryptocurrencies. Despite a decline in inflation over the past year, core inflation remains higher than expected, causing uncertainty about the extent of the rate cut. Some Fed officials advocate for a cautious 25 basis point cut to prevent fueling inflation further. In comparison, others argue for a more aggressive 50 basis point reduction due to rising unemployment and slowing wage growth.
BTC faces pressure below $59K
As the market grapples with uncertainty, Bitcoin struggles to maintain its recent gains. The cryptocurrency fell below $59,000, shedding 3% in the last 24 hours. Despite this decline, BTC has secured a 7% increase over the past week. Currently, Bitcoin trades at an average price of $58,649.
The broader crypto market is also experiencing heightened selling pressure, as reflected in the fear index. Major digital assets like Solana (SOL) and Cardano (ADA) have each dropped by more than 4% in the last 24 hours, contributing to the overall market downturn.
Fed decision to set market tone
The upcoming Fed decision will likely set the tone for various financial markets, including stocks, bonds, and cryptocurrencies. While the stock market ended the previous week on a positive note, with the Nasdaq gaining 6%, the S&P 500 rising 4%, and the Dow Jones climbing 3%, the crypto market has not fared as well.
With the Federal Reserve’s interest rate decision looming, market participants are preparing for potential volatility across asset classes. Powell’s statements and the Fed’s updated projections will be closely monitored, as they could significantly impact market sentiment and future trends in both traditional and digital markets.