WASHINGTON (dpa-AFX) - Uncertainty about the Fed's monetary policy and likely interest rate trajectory weighed on markets ahead of the release of the monthly data on consumer price inflation from the U.S. on Wednesday.
Overall crypto market capitalization declined more than 3 percent overnight while Bitcoin has slipped 3 percent below the all-time high touched a day earlier.
In data to be released on Wednesday morning, the U.S. Bureau of Labor Statistics is expected to show that the headline annual inflation in the U.S. rose to 2.6 percent in October from 2.4 percent in the previous month. The core component thereof is seen steady at 3.3 percent. Inflation on a month-on-month basis is expected to be steady at 0.2 percent while the core component thereof excluding the volatile food and energy component is also expected to remain steady at 0.3 percent as was in September.
The expected spike in headline inflation assumes significance as inflation has been steadily declining since March 2024 when it touched 3.5 percent. The core inflation had edged up to 3.3 percent in September 2024 from the three-year low of 3.2 percent recorded in the two previous months.
Though the Federal Open Markets Committee had as recently as November 7 placed on record that the risks to achieving its employment and inflation goals are roughly in balance, markets are concerned about the potential impacts of the new administration's policies on prices and price pressures in the U.S. The Fed has also time and again stated that though inflation has made progress toward the Committee's 2 percent objective it remains somewhat elevated.
The hardening in bond yields in the U.S. over the course of the past month also weighed on sentiment. Cryptocurrencies being non-interest bearing, the increase in market yields bodes ill for the asset class as it increases the opportunity cost of holding cryptocurrencies.
Though the Fed slashed rates by 50 basis points in September and by 25 basis points in November and also signaled more rate cuts, rate cut expectations are not very high. The CME FedWatch tool that tracks the expectations of interest rate traders currently shows a 66-percent probability for a quarter-point rate cut and a 34-percent likelihood for a pause by the Fed in the FOMC review in December.
Amidst the nervousness, crypto market capitalization has fallen to $2.89 trillion. More than 80 percent of the top 100 cryptocurrencies are trading with overnight losses of more than a percent whereas more than 35 percent are trading with overnight losses of more than 10 percent.
Coinmarketcap's Crypto Fear and Greed Index, a barometer of the emotional state of the market is currently at 84 denoting 'Extreme Greed'. It was at 86 (Extreme Greed) a day earlier, at 62 (Greed) a week earlier and at 46 (Neutral) a month earlier.
Bitcoin has lost 0.94 percent overnight to trade at $87,507.35. BTC has however added 18.4 percent in the past week and is holding on to gains of close to 107 percent in 2024. The original cryptocurrency traded between $89,915.57 and $85,155.11 in the past 24 hours.
Data from Farside Investors showed inflows to Bitcoin Spot ETF products in the U.S. falling to $818 million on Tuesday from $1,114 million a day earlier. iShares Bitcoin Trust (IBIT) topped with inflows of $778 million. Ark 21Shares Bitcoin ETF (ARKB) however recorded outflows of $5.4 million.
Ethereum plunged 6.6 percent in the past 24 hours to trade at $3,167.54, around 35 percent below the previous peak. Weekly gains are at 20.8 percent whereas gains in 2024 are a little less than 39 percent. Ether traded between $3,374.82 and $3,121.67 in the past 24 hours.
Data from Farside Investors showed inflows to Ethereum Spot ETF products in the U.S. falling to $136 million on Tuesday from $296 million a day earlier.
4th ranked Solana (SOL) slipped 5.4 percent overnight but is holding on to weekly gains of more than 12 percent at its current trading price of $206.89.
5th ranked BNB (BNB) also lost 5.9 percent overnight and is currently trading at $608.46.
6th ranked Dogecoin (DOGE) tumbled 11.8 percent overnight to trade at $0.3734. DOGE has however added 88 percent in the past week and close to 317 percent in 2024.
7th ranked XRP (XRP) has shed 1.1 percent overnight to trade at $0.6598. The cryptocurrency issued by Ripple Labs has gained 7.3 percent on a year-to-date basis.
9th ranked Cardano (ADA) plunged 14.5 percent overnight to trade at $ 0.5315.
10th ranked TRON (TRX) rallied 4.7 percent overnight. TON is currently trading at $0.1761.
Peanut the Squirrel (PNUT), a Solana-based meme coin topped overnight gains with a surge of more than 192 percent. The cryptocurrency that was launched on November 5 has gained more than 1000 percent in the past week and almost 2350 percent till-date and is currently ranked 65th overall.
73rd ranked Neiro (NEIRO) that has declined 17.2 percent is the greatest laggard on an overnight basis.
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