Cryptocurrencies Drop Up to 7% as Bitcoin Holds Near $118,000
Another key driver of crypto enthusiasm is a potential shift in Federal Reserve policy. U.S. inflation has cooled more than expected.
Quick overview
- Bitcoin remains above $118,000 despite a slight 0.2% retreat, while Ethereum adjusts after a strong weekly rally.
- The cryptocurrency market is experiencing a broad correction, with altcoins seeing losses of up to 7%.
- Political and monetary signals, including favorable legislation and potential Federal Reserve rate cuts, are fueling optimism in the crypto space.
- Institutional interest remains strong, highlighted by significant investments and positive ETF flows despite recent profit-taking.
Bitcoin remains above $118,000 despite a slight retreat, while Ethereum adjusts after a strong weekly rally.
Profit-taking comes amid political and monetary signals that continue to support institutional interest in crypto assets, as markets await clarity on Fed rate policy and benefit from increased regulatory backing in the U.S.
The cryptocurrency market is undergoing a broad correction on Tuesday, following a week of sustained gains and renewed institutional interest. Bitcoin (BTC) is down roughly 0.2%, according to Binance, but remains above $118,000. Ethereum (ETH) is down 4.41% after a 20% gain over the past week, trading near $3,600. Meanwhile, altcoins are seeing losses of up to 7%, led by Hyperliquid, Hedera (-6.2%), and Stellar (-5.9%).
[[]BTC/USD-graph]]
Expected Cooldown After Sharp Rally
Market analysts are downplaying the pullback. “It’s a technical pause after a steep, uninterrupted rally. It doesn’t change the underlying bullish trend,” various research firms noted.
Indeed, spot bitcoin ETFs recorded their first session of net outflows after twelve straight days of inflows, while ethereum ETFs marked their twelfth consecutive day of positive flows—highlighting sustained institutional interest in crypto, especially amid the current regulatory and monetary environment.
Political and Monetary Signals Fuel Optimism
Major political and financial players are also adding to the bullish sentiment. On Monday, Trump Media, the social media company tied to former President Donald Trump, announced a $2 billion investment in bitcoin—reaffirming its pro-crypto stance. The move revived speculation that a pro-crypto administration could extend the bull cycle beyond typical historical patterns.
At the same time, the U.S. House of Representatives is advancing favorable legislation for the crypto ecosystem, including the GENIUS Act for stablecoins. In a symbolic shift, JPMorgan Chase CEO Jamie Dimon—who famously called bitcoin a “fraud” in 2017—recently acknowledged that investors should have the right to trade crypto. The bank is reportedly considering offering BTC- and ETH-backed loans, according to the Financial Times.
What to Expect from the Fed
Another key driver of crypto enthusiasm is a potential shift in Federal Reserve policy. U.S. inflation has cooled more than expected, prompting speculation that a rate-cutting cycle could begin between September and December. Goldman Sachs is forecasting three cuts of 25 basis points each—provided inflation doesn’t rebound.
Looser monetary policy tends to benefit risk assets, including cryptocurrencies, which have historically rallied during periods of monetary expansion.
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