Bitcoin slips 3%, Ether falls 6% ahead of Fed, BoE and BoJ interest rate decisions.
Key receivers
Bitcoin and Ethereum experienced significant drops in the last 24 hours. The market is expecting a more aggressive 50-basis-point rate cut by the Fed.
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Bitcoin (BTC) slipped by 3%, Ethereum (ETH) fell by 6% in the last 24 hours, ahead of a crucial week in which interest rate decisions by central banks will be in focus. The total value of the crypto market currently stands at 2.12 trillion dollars, which is a decrease of 4.5% in one day.
Volatility returned at the end of the week as bitcoin dipped to a low of $58,200 before recovering slightly to trade above $58,600, according to data from CoinGecko. The market is divided, with bulls and bears clashing over Bitcoin's future direction.
As Bitcoin pulled back, altcoins began to sink. In the past 24 hours, Ethereum has fallen as much as 6% to $2,300, while Solana (SOL), Doge (DOGE) and Ripple (XRP) are each down 5%.
Among the top 100 crypto assets, Injective (INJ), Internet Computer (ICP), Pepe (PEPE) and Ondo (Ondo) experienced significant losses of 7 percent on average.
The crypto market will benefit from more volatility as the Federal Reserve (Fed) rate decision approaches. Economists warn that a 25-basis-point rate cut could lead to a “sell-news” event as the market priced in this adjustment.
Market sentiment has shifted dramatically regarding the Fed's upcoming interest rate decision. CME's FedWatch tool now shows a 41% chance of a 25-basis-point cut and a 59% chance of a 50-basis-point cut.
The latter's odds were just 30% last week, and just yesterday it stood on par with a 25-basis-point decline.
Market participants are rooting for a 50-basis-point cut. Economists' views on this are mixed.
Johns Hopkins University economist Steve Hanke told The Block that a 50-basis-point decline could boost the crypto market.
“… a 50-basis-point cut has not been investigated for reasons. If implemented, it would probably drive the market higher,” he said.
Nevertheless, aggressive cuts can signal a troubled economy, which defies optimism about moderate cuts. According to 21Shares research analyst Lena Eldib, a possible recession could lead to sales of “risky assets in the short term.”
The Fed is expected to make its key decision on Wednesday, September 18. The rate cut will mark the first rate cut since 2020, reversing a tightening cycle that began in 2022.
In addition to the US central bank, eyes are on interest rate decisions by the Bank of England and the Bank of Japan.
The Bank of England is scheduled to announce its next interest rate decision on September 19. The meeting follows the bank's recent rate cut from 5.25% to 5% on August 1, marking the first cut since the start of the tightening cycle. By the end of 2021.
Members of the Monetary Policy Committee said they are keeping a close watch on the possibility of inflation continuing even after inflation has come down to target levels.
The Bank of Japan will announce its interest rate decision on September 19. The meeting is being closely watched as the bank has maintained a tight monetary policy for years, with negative interest rates and curve control measures in place.
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