Bitcoin and Ether Prices Decline Amid Anticipation of Federal Reserve Interest Rate Cut

Market Overview

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Current Prices

• CoinDesk 20 Index: 1,822.90 (-3.32%)
• Bitcoin (BTC): $58,779.97 (-1.93%)
• Ether (ETH): $2,302.66 (-4.24%)
• S&P 500: 5,626.02 (+0.54%)
• Gold: $2,580.54 (+1.47%)
• Nikkei 225: 36,581.76 (-0.68%)

Key Insights

Bitcoin experienced a notable decline, dropping below the $59,000 threshold after maintaining a position above $60,000 for much of the weekend. As of the European morning session, BTC was trading around $58,550, reflecting a decrease of 2.4% over the last 24 hours. This decline comes at the start of a pivotal week where traders globally are anticipating the Federal Reserve’s first interest-rate cut in over four years. The overall digital asset market, as indicated by the CoinDesk 20 Index (CD20), has recorded a 3.6% decrease. The crypto markets saw a brief lift on Friday, fueled by favorable U.S. economic data, leading to a short-term rally. Bitcoin Exchange-Traded Funds (ETFs) reported inflows exceeding $263 million, marking the highest level since July 22, while ether ETFs saw a modest inflow of around $1.5 million.

Ether has taken the lead in losses among major cryptocurrencies, experiencing a 4.5% slide within 24 hours. Other notable declines include Cardano’s ADA, which fell by 5%, and Solana’s SOL, down by 4%. In contrast, BNB Chain’s BNB performed relatively well, only slipping by 1.1%. Data from CoinGlass indicates that futures traders who were betting on higher prices faced losses exceeding $143 million due to this sudden downturn. Additionally, the widely monitored BTC/ETH ratio, which tracks the relative performance of the two leading tokens, has dropped to a four-year low. Ethereum has faced significant competition over the past year, particularly from Solana, which has emerged as a preferred platform for launching memecoins. Newer chains such as Coinbase’s Base and Telegram-affiliated TON have also attracted attention, potentially impacting demand for Ethereum’s native token.

The Federal Reserve is expected to announce an interest-rate cut on September 18, signaling the beginning of an easing cycle. However, traders are divided on the anticipated magnitude of the cut, setting the stage for possible volatility in financial markets following the decision. At press time, Fed funds futures indicated a 41% probability of a 25 basis points (bps) reduction to the 5%-5.25% range, while a larger cut of 50 bps to the 4.7%-5% range had a 59% chance. The recent stalling of bitcoin’s upward momentum, following its recovery from below $53,000, may be attributed to the uncertainty surrounding the upcoming rate cut.

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