As a seasoned crypto investor with over a decade of experience in this rollercoaster market, I’ve learned to expect the unexpected. The recent dip in Bitcoin and Ether prices, while disheartening, is hardly surprising. The crypto market has always been volatile, much like a wild stallion that refuses to be tamed.
An agreeable summer Tuesday night in the U.S. suddenly took an unexpected turn as bitcoin (BTC) dropped approximately 6% within minutes, effectively undoing significant advancements made late last week following a less hawkish stance by Federal Reserve Chair Jerome Powell and the alliance between pro-crypto presidential contenders Donald Trump and RFK Jr.
As a researcher observing the cryptocurrency market, I’ve noticed that after dipping as low as $58,200, Bitcoin showed a recovery and surpassed $60,100 during early U.S trading on Friday. However, as we approach noon, this upward trend seems to be fading, with Bitcoin currently hovering around $58,800 – a 4.5% decrease over the past 24 hours. The broader CoinDesk 20 Index is mirroring this decline.
This year has seen contrasting stories in Exchange-Traded Fund (ETF) launches, particularly for those focused on Bitcoin and Ether. While Bitcoin funds have experienced an impressive inflow of over $10 billion, Ethereum vehicles have witnessed a decrease in assets since they were first introduced.
Macro outlook becomes a bit less inviting
As a researcher, I’ve observed that the decline in major U.S. stock averages, notably a 1.3% drop in the Nasdaq, has added to the pressure on cryptocurrencies. The tech-focused Nasdaq was significantly impacted by a 3% decrease in Nvidia (NVDA), which is set to release its quarterly earnings after market close on Wednesday. Despite being slightly below its all-time high achieved earlier this summer, Nvidia’s impressive 159% year-to-date growth leaves ample room for potential disappointment if the company underperforms in either its current quarter or future outlook.
Additionally, there’s some unease due to the possibility that investors might have overinterpreted Federal Chair Powell’s soft remarks during the central bank’s Jackson Hole conference last week. Traders on Friday swiftly adjusted their predictions, almost doubling the likelihood of the Fed reducing its benchmark fed funds rate by 0.5% (rather than the previously assumed 0.25%) at the upcoming September meeting.
As a researcher, I’m keenly aware that we still have several crucial data points to be released prior to our September meeting, among them being the government’s employment and inflation reports for August. Given the current economic climate, these figures are expected to exhibit a certain level of softness for the Federal Reserve to consider implementing such a substantial rate reduction swiftly. At present, the probability of a 50 basis point adjustment has dipped to 36%, as per CME FedWatch’s latest projections.
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2024-08-28 19:12