On Tuesday, the price of Bitcoin experienced a slight decline, while a rally in the second-largest token, Ether, tapered off. This trend occurred amidst anticipation surrounding key inflation data, which kept traders largely cautious towards assets like cryptocurrencies that are perceived as riskier.
Simultaneously, excitement surrounding the approval of exchange-traded funds (ETFs) directly tracking Ether took a backseat, as the Securities and Exchange Commission (SEC) engaged with fund managers regarding their applications for listing such products.
Last week, the SEC approved applications from major exchanges to list a spot Ether ETF, triggering a notable rally in the token and broader crypto markets.
As of 09:08 ET (13:08 GMT), Bitcoin had declined by 0.5% over the past 24 hours to $68,289.3, while Ether retreated by 0.4% to $3,899.26, stepping back from its two-month highs reached over the weekend.
Concerns about higher U.S. interest rates persist, particularly in anticipation of the release of the monthly personal consumption expenditures (PCE) price index on Friday, which serves as the Federal Reserve’s preferred inflation gauge and is likely to influence the central bank’s rate outlook.
Market sentiment towards cryptocurrencies and other risk-driven assets was dampened by growing suspicions that the Fed is not eager to reduce rates from their current levels, which have not been seen in over two decades. Several officials from the central bank have recently indicated that they require more evidence of sustainable cooling in inflation towards their 2% target before considering any rate cuts.
This sentiment has kept Bitcoin comfortably within a trading range established over nearly three months and has also constrained larger gains in Ether.
The prospect of high interest rates does not bode well for speculative assets like cryptocurrencies, as they restrict liquidity available for investment in this space and increase the attractiveness of conventional, low-risk investments such as the U.S. dollar and Treasuries.
