CoinDesk 20 Down 7%, Bitcoin Sinks by 5% as Asia Trading Week Begins

As a seasoned crypto investor with a few years under my belt, I’ve seen my fair share of market volatility. The latest downturn, with the CD20 down 7% and bitcoin sliding 5%, is nothing new to me. However, the uncertainty surrounding interest rates is becoming a recurring theme that’s likely dragging on the market.

The measurement called CoinDesk 20 (CD20), representing the largest digital assets, started the Asian trading session this week with a decrease of 7%. Simultaneously, Bitcoin experienced a drop of 5%, fueled by heightened anticipation for a Federal Reserve interest rate reduction in September.

Over the past week, Bitcoin has experienced a 13% decline. This drop brings its current state closer to how it appeared following the FTX collapse.

Surprisingly robust American job figures, yet an uptick in the unemployment rate, have hinted at the Federal Reserve implementing a rate reduction in September based on ING’s latest analysis.

James Knightley of ING noted that the private sector created merely 136,000 positions in June, falling short of the anticipated 160,000. The public sector, education, and healthcare industries accounted for almost six in ten new jobs, while retail, temporary help services, professional business services, and manufacturing sectors experienced a decrease in employment.

As a researcher at Citi, I would express it this way: In our latest analysis, we are projecting a more forceful stance from the Federal Reserve, anticipating a total of eight interest rate reductions starting in September 2024 and extending through July 2025. This would result in a decrease of the benchmark rate by 200 basis points to the range of 3.25%-3.5%.

People placing wagers on Polymarket believe there is a good probability that the Federal Reserve will implement between one to two interest rate reductions by the year’s end. The likelihood of just one reduction stands at approximately 34%, while the possibility of two reductions is around 37%.

The so-called dovish Fed expectations also failed to lift Asian stocks as the European Union’s decision to impose steep tariffs on the import of Chinese electric vehicles soured the sentiment. Elsewhere, French voters gave leftists more seats than far right but failed to secure a majority, leaving a potentially hung parliament, a recipe for political and policy paralysis and potential risk aversion in European markets.