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The crypto market is in the red as investors weigh recent comments from top Fed officials, which reflect a cautious approach by the central bank as regards interest rates.
According to CNBC, Federal Reserve Governor Michelle Bowman stated on Monday that while monetary policy "is now in a good place," she wants to see further progress on inflation before further decreasing interest rates.
The latest remarks are in line with previous comments from other Fed officials. Fed Chair Jerome Powell has repeatedly stated that the central bank is not rushing to cut interest rates, but any insight into the future path of monetary policy will be welcomed by investors.
Sentiment settled following the release of January’s producer price index last Thursday and the consumer price index report on Wednesday, which pushed back rate-cut expectations until the second half of 2025.
Tomiwabold OlajideAccording to CME Group data, markets expect only one or two quarter-point interest rate reductions by the end of 2025. Markets are pricing in a nearly 98% possibility of no rate cuts at the Fed's next meeting in March.
Crypto markets react
The majority of cryptocurrencies fell in the early Tuesday trading session as the Federal Reserve’s cautious outlook for interest rate cuts dampened enthusiasm for speculative assets. Higher rates tend to lessen the allure of risky assets, while lower rates tend to be beneficial for crypto assets. In the last 24 hours, nearly $279 million have been liquidated on the cryptocurrency market.
Bitcoin lost less than 1%, but Ethereum (ETH), XRP, Cardano's ADA and BNB Chain's BNB all fell by about 4%. Solana's SOL fell 8% to around $169, while meme coins Dogecoin (DOGE) and Shiba Inu (SHIB) fell roughly 5%.
Investors are looking toward the FOMC meeting minutes later this week and will also be watching the Fed meeting minutes, set for release Wednesday, for hints as to how long the Central Bank wants to keep rates steady.
Dan Burgin
Vladislav Sopov