Cryptos Rise As Markets Price In A Half-percent Cut

Firm expectations of a 50-basis points rate cut by the Federal Reserve on Wednesday afternoon helped cryptocurrencies record strong gains in the past 24 hours. Amidst optimism that the Fed would start its monetary easing emphatically, overall crypto market capitalization has increased 1.6 percent overnight to $2.08 trillion. Bitcoin breached $61,300 and Ethereum touched $2,392 in the past 24 hours amidst the rate cut euphoria.

The Fed had begun a rate hiking spree in March 2022 after inflation jumped to 7.9 percent in the aftermath of the massive liquidity infusion that followed the Covid-19 pandemic. In doses of 25, 50 and even 75 basis points, the Fed raised rates in 11 meetings to the current level 5.25 percent – 5.50 percent.

When the Fed last hiked rates in July 2023, headline annual consumer price inflation was at 3 percent whereas unemployment rate was at 3.6 percent. GDP growth in the second quarter of 2023 was at 2.1 percent. After a longer-than-expected period of higher-than-expected interest rates, headline annual consumer price inflation has now softened to 2.5 percent. The GDP growth has rebounded to 3 percent in the second quarter of 2024 after falling to 1.4 percent in the previous quarter. However, the unemployment rate has increased to 4.2 percent, prompting the Federal Reserve Chair Jerome Powell to acknowledge the shift in the Fed’s focus to the unemployment situation.

The Federal Reserve System which has been given a dual mandate of pursuing the economic goals of maximum employment and price stability has hinted at taking cognizance of the effect of restrictive interest rates on the economy and the labor force. In this backdrop, markets have firmed up expectations of a big slash to the Fed funds rate which is currently at a 23-year high. The CME FedWatch tool that tracks the expectations of interest rate traders now shows 63 percent expecting a 50-basis points cut and 37 percent expecting a 25-basis points cut.

Bitcoin reflected the rate cut euphoria rallying 2.4 percent overnight, 6.7 percent in the past week and 42.4 percent on a year-to-date basis. It is currently trading at $60,196.33, around 18 percent below the all-time high.

Data from Farside Investors on Bitcoin Spot ETF products in the U.S. showed inflows jumping to $186.8 million on Tuesday from $12.8 million a day earlier. Fidelity Wise Origin Bitcoin Fund (FBTC) topped with inflows of $56.6 million followed by Bitwise Bitcoin ETF (BITB) that recorded inflows of $45.4 million. Surprisingly, iShares Bitcoin Trust (IBIT) recorded no net inflows whereas Grayscale Bitcoin Trust (GBTC) recorded no net outflows.

Ethereum added half percent in the past 24 hours to trade at $2,321.27, around 53 percent below the previous peak. Weekly losses have been restricted to 0.11 percent whereas gains in 2024 exceed 1.7 percent.

Data from Farside Investors on Ethereum Spot ETF products in the U.S. showed a net outflow of $15.1 million on Tuesday as compared with a net outflow of $9.4 million on Monday. Flows were recorded only in Grayscale Ethereum Trust (ETHE) that recorded a net outflow of $17.9 million and Grayscale Ethereum Mini Trust (ETH) that recorded a net inflow of $2.8 million.

4th ranked BNB (BNB) added 0.83 percent overnight and more than 6 percent in the past week to trade at $543.57.

5th ranked Solana (SOL) shed 1.3 percent overnight and 0.4 percent in the week. SOL is currently trading at $130.82 implying year-to-date gains of close to 29 percent.

7th ranked XRP (XRP) has shed 1.5 percent overnight to trade at $0.5766. Despite weekly gains of 8.3 percent, the cryptocurrency issued by Ripple Labs is saddled with year-to-date losses of more than 6 percent.

8th ranked Dogecoin (DOGE) added half percent overnight to trade at $0.1012. 9th ranked Toncoin (TON) gained 0.6 percent overnight and 5.3 percent in the past week. TON is currently trading at $5.52. TRON (TRX) ranked 10th overall has edged up 0.11 percent in the past 24 hours to trade at $0.1502.

74th ranked Nervos Network (CKB) topped with overnight gains of 15.4 percent following listing by Korean exchange Upbit. The cryptocurrency of the open-source public blockchain ecosystem has gained 115 percent in the past week and 359 percent in 2024.

34th ranked Bittensor (TAO) followed with overnight gains of 7.92 percent. 59th ranked Celestia (TIA), 99th ranked BinaryX (BNX) and 37th ranked Immutable (IMX) have all gained more than 6 percent in the past 24 hours.

55th ranked Arweave (AR) is the greatest laggard, shedding more than 5 percent overnight. 60th ranked Helium (HNT) erased 4.8 percent whereas 52nd ranked Maker (MKR) recorded losses of more than 3.5 percent in the past 24 hours.

For More Cryptocurrency News, visit rttnews.com