WASHINGTON (dpa-AFX) - Cryptocurrencies lost heavily in the past 24 hours as markets digested the interest rate guidance contained in Fed Chair Jerome Powell's Senate testimony on Tuesday. Anxiety ahead of the release of the monthly CPI data from the U.S. on Wednesday morning also weighed on sentiment. Overall crypto market capitalization declined more than 2 percent overnight.
In his testimony before the U.S. Senate's Committee on Banking, Housing, and Urban Affairs on Tuesday, Jerome H. Powell, Chair of the Board of Governors of the Federal Reserve System opined that the Fed did not need to be in a hurry to adjust its policy stance. He acknowledged that the Fed's policy stance was now significantly less restrictive than it had been, and that the economy remained strong.
The Fed Chair remarked that though inflation has eased significantly over the past two years, it remained somewhat elevated relative to the Fed's 2 percent longer-run goal. Powell also noted that the labor market was not a source of significant inflationary pressures.
Crypto markets declined as Fed rate cut expectations faded with the Fed Chair's forward guidance. The CME FedWatch tool that tracks the expectations of interest rate traders shows expectations of a status quo on rates in the next Fed review in March rising to 95.5 percent. It was at 95 percent a day earlier, 83 percent a week earlier and 75.5 percent a month earlier.
Powell would be testifying before the House Financial Services Committee on Wednesday.
The minor uptick in consumer price inflation in the U.S. expected in January also contributed to the decline in cryptocurrency prices. Headline annual inflation in January is seen steady at 2.9 percent whereas the core component is seen edging down to 3.1 percent from 3.2 percent previously. Month-on-month inflation is seen edging down to 0.3 percent from 0.4 percent in December. The core component thereof after excluding volatile energy and food prices is however seen rising to 0.3 percent from 0.2 percent in the previous month.
Amidst the anxiety about interest rates as well as the uncertainty triggered by the growing trade war, crypto market sentiment deepened into a state of fear. The CMC Fear and Greed Index, a proprietary tool developed by CoinMarketCap to measure the emotional state of the market has decreased to 35 (Fear) from 37 (Fear) a day ago and 38 (Fear) a week ago.
Overall capitalization has fallen to $3.16 trillion, recording an overnight decline of 2.03 percent.
Bitcoin dropped 2.1 percent overnight to trade at $95,950.38, around 12 percent below the all-time high. BTC has lost 2 percent in the past week but is holding on to gains of 5 percent over the past 30 days. Bitcoin traded between $98,254.79 and $94,875.04 in the past 24 hours.
Data from Farside Investors showed that Bitcoin Spot ETF products in the U.S. recorded outflows of $57 million on Tuesday versus outflows of $186 million a day earlier.
Ethereum has slipped 3.1 percent in the past 24 hours to trade at $2,616.01, around 47 percent below the previous peak recorded in November 2021. Weekly losses are close to 6 percent. Ether traded between $2,710.91 and $2,565.40 in the past 24 hours.
Latest data revealed that inflows to Ethereum Spot ETF products in the U.S. recorded inflows of $13 million on Tuesday versus outflows of $23 million on Monday.
4th ranked XRP (XRP) declined 3.3 percent overnight to trade at $2.40, around 37 percent below the all-time high touched in January 2018. The cryptocurrency's weekly losses exceed 4.7 percent.
The price of 5th ranked Solana (SOL) decreased 3.3 percent overnight. With weekly losses of 4.5 percent, SOL is currently trading at $195.87, around 33 percent below its record high on January 19, 2025.
6th ranked BNB (BNB), the highest-ranking cryptocurrency to trade with overnight gains added 1.8 percent, lifting gains in the past week to 13.8 percent. BNB is currently trading at a price of $650.57 which is 18 percent below the all-time high touched on December 4, 2024.
8th ranked Dogecoin (DOGE) dropped 4.1 percent overnight to trade at $0.254. Having shed 4.4 percent in the past week, DOGE is trading 66 percent below the previous peak scaled in May 2021.
9th ranked Cardano (ADA) erased 0.30 percent overnight to trade at $0.791. ADA, which gained 4.5 percent in the past week is currently trading 74 percent below the record high touched in September 2021.
10th ranked TRON (TRX) declined 1.9 percent overnight to trade at $ 0.2419. TRX has added 6.9 percent in the past week. The trading price is 45 percent below the cryptocurrency's all-time high recorded on December 4, 2024.
85th ranked Jito (JTO) that rallied 2.6 percent and 6th ranked BNB (BNB) that gained 1.8 percent in the past 24 hours are the only two cryptocurrencies among the top 100 to record overnight gains of more than a percent.
65th ranked Ethena (DNA) topped overnight losses with a decline of 11.5 percent. 97th ranked Curve DAO Token (CRV) followed with losses of 10.6 percent.
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