WASHINGTON (dpa-AFX) - Despite an uncertain Fed rate path as revealed in the minutes of the recent Federal Open Markets Committee meeting and anxiety ahead of the release of the Fed's preferred PCE-based inflation readings, cryptocurrencies are trading with strong overnight gains.
Overall crypto market capitalization increased more than 2 percent overnight to $3.24 trillion amidst a decline in the Dollar Index, a spike in the safe-haven Japanese yen, an easing in global bond yields and a negative bias in Wall Street Futures.
Minutes of the FOMC released on Tuesday showed participants being concerned about easing policy too quickly or too slowly. They noted that monetary policy would need to balance the risks of easing policy too quickly, thereby possibly hindering further progress on inflation, with the risks of easing policy too slowly, thereby unduly weakening economic activity and employment. The participants also deemed it appropriate to reduce policy restraint gradually given the uncertainties concerning the level of the neutral rate of interest.
Expectations of a quarter point Fed rate cut in December that would reduce the target rate to 4.25 - 4.5 percent from the current level of 4.50-4.75 percent is strong at 66.5 percent. Probability of a further rate cut to 4.00-4.25 percent is at 14 percent for the January review and at 39 percent for the Fed decision in March.
Meanwhile, in data to be released by the U.S. Bureau of Economic Analysis on Wednesday morning, the Annual PCE Price index is seen at 2.3 percent, higher than 2.1 percent in the previous month. The core PCE component thereof is seen rising to 2.8 percent from 2.7 percent in the previous month. Consumer price inflation as measured by the 12-month change in the price index for personal consumption expenditures had moved lower in August and September. The month-on-month reading is seen steady at 0.2 percent whereas its core constituent is seen steady at 0.3 percent. The update on the Fed's preferred inflation gauge is seen weighing on market sentiment.
The six-currency Dollar Index which had touched a 2-year high of 108.07 on Friday is currently at 106.49, retreating close to half percent overnight.
Bitcoin has rallied 0.8 percent overnight to trade at $93,245.73, around 6 percent below the all-time high. BTC has slipped half a percent in the past week but is holding on to gains of 35.9 percent over the past 30 days and 120.5 percent in 2024. Data from Farside Investors showed outflows of $123 million from Bitcoin Spot ETF products in the U.S. on Tuesday. The funds had recorded outflows of $435 million a day earlier.
Fidelity Wise Origin Bitcoin Fund (FBTC) recorded outflows of $96 million followed by Grayscale Bitcoin Trust ETF (GBTC) that witnessed outflows of $36 million.
Ethereum rallied 3.6 percent in the past 24 hours to trade at $3,454.03, around 29 percent below the previous peak. Weekly gains are more than 11.5 percent whereas gains in 2024 are at 51.4 percent.
Ether Spot ETF products in the U.S. saw inflows of $41 million on Tuesday versus inflows of $3 million a day earlier.
4th ranked Solana (SOL) added 3.4 percent overnight, limiting weekly losses to 1.1 percent. SOL is currently trading at $235.06, around 11 percent below its record high.
5th ranked BNB (BNB) edged up a quarter percent overnight and gained 1.4 percent in the past week at its current trading price of $621.62. BNB is currently trading 14 percent below the all-time high.
6th ranked XRP (XRP), the cryptocurrency issued by Ripple Labs however resisted the bearish trend, adding 7.7 percent overnight. The price move came amidst Wisdom Tree filing for an XRP ETF and expectations of a legal victory in its long-standing dispute with the Securities and Exchange Commission. XRP has added 27.6 percent in the past week and 132.9 percent in 2024. The cryptocurrency is currently changing hands at $1.43, around 63 percent below the all-time high.
7th ranked Dogecoin (DOGE) gained 2.3 percent overnight to trade at $0.3872. DOGE is trading 48 percent below the previous peak.
9th ranked Cardano (ADA) leaped 12.1 percent overnight to trade at $1.01. ADA is currently trading 67 percent below the record high till date.
10th ranked Avanche (AVAX) surged 10.6 percent overnight to trade at $ 43.68. AVAX has gained 25.1 percent in the past week. The trading price is 70 percent below the cryptocurrency's all-time high.
99th ranked Zcash (ZEC) topped overnight gains with a surge of more than 25 percent. 53rd ranked Algorand (ALGO), 49th ranked Aave (AAVE) and 13th ranked Stellar (XLM) have all added more than 14 percent overnight.
88th ranked Peanut the Squirrel (PNUT) and 80th ranked Popcat (POPCAT) topped overnight losses with a decline of more than 1.7 percent. 67th ranked The Sandbox (SAND) that lost 1.5 percent is the only other cryptocurrency among the top 100 to trade with overnight losses of more than a percent.
Tornado Cash (TORN) which was ranked 1041 overall on November 24, 2024, jumped to the 467th rank overall in the aftermath of a U.S. Court ruling in favor of the altcoin that was placed under OFAC sanctions by the U.S. Treasury Department in 2022. The privacy-enabling coin which offers a cryptocurrency mixing service has surged 421 percent overnight, 479 percent in the past week and 987 percent on a year-to-date basis.
The United States Court of Appeals for the Fifth Circuit on Tuesday held that Tornado Cash's immutable smart contracts are not the 'property' of a foreign national or entity and therefore could not be blocked under The International Emergency Economic Powers Act. The court also held that the Treasury Department's Office of Foreign Assets Control or OFAC overstepped its congressionally defined authority. The court emphasized that legislating was the Congress's job-and Congress's alone.
Crypto markets also welcomed news regarding Brazil proposing a strategic Bitcoin Reserve aimed at shielding Brazil from currency swings.
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