Bitcoin and Ether Drop as Investors Brace for Potential Fed Rate Cuts

Bitcoin (BTC) kicked off the trading week with a 3% decline, dipping below the $58,400 mark. Over the weekend, BTC managed to stay above $60,000, buoyed by positive U.S. economic data that triggered a rally late on Friday. Meanwhile, U.S.-listed Bitcoin exchange-traded funds (ETFs) saw significant interest, with net inflows exceeding $263 million, the highest since July 22. Ether ETFs also experienced their second day of inflows since August 28, amounting to $1.5 million.

However, as Asian markets opened on Monday, the crypto sector faced a downturn. This comes at the start of a crucial week, with global traders anticipating the Federal Reserve’s first interest rate cuts in more than four years. According to Polymarket data, there is a 51% chance of a 50 basis point cut, a 48% likelihood of a 25 basis point reduction, and only a 2% chance that rates will remain unchanged.

Historically, lower borrowing costs tend to encourage optimism in the markets, as easier access to capital often leads to growth in riskier sectors. Despite this, Ether (ETH) took a leading role in the market’s decline, falling by 5.5% over the past 24 hours, its steepest one-day drop since early August, according to CoinGecko. Cardano’s ADA dropped by 5%, Solana’s SOL by 4%, while BNB Chain’s BNB fared slightly better with a modest 1.1% loss.

On the upside, Nervos’ CKB saw a surge, gaining 10.5% over the last 24 hours. This rise is attributed to the continued positive sentiment following the listing of CKB on the Korean exchange Upbit, known for its appetite for memecoins. Meanwhile, futures traders betting on rising prices faced losses of over $143 million due to the unexpected market drop, as reported by CoinGlass.

Additionally, the BTC/ETH ratio, a key indicator that measures the relative performance of Bitcoin against Ether, has dropped to its lowest point in four years. Ethereum has been under pressure from increasing competition, with Solana becoming a favored platform for launching new tokens, particularly memecoins. Emerging chains like Base and the Telegram-affiliated TON are also capturing market attention, likely reducing the demand for ETH.

Further competition may come from Sony’s Soneium blockchain, which is still under development. Sony, in partnership with Circle, announced that USDC, a popular stablecoin, will be available on the Soneium chain. However, the announcement did not disclose the amount of USDC that would be issued.

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