Cryptocurrency markets remained under pressure during U.S. trading hours on Thursday, continuing a pullback that began the previous day when the Federal Reserve signaled it only expected to cut rates once this year.
Ether’s Volatile Day
The price of ether (ETH) saw a mid-morning bounce after U.S. Securities and Exchange Commission Chairman Gary Gensler, in testimony at a Senate hearing, stated that he expected spot ether ETFs to receive full approval from his agency by the end of the summer. This news briefly boosted ether by 1%, but the gains were short-lived. An hour later, the price had reversed, dropping more than 3%. At press time, ether was trading at $3,440, down 5% over the past 24 hours. The broader CoinDesk 20 Index was also down by 4.9% during the same period.
Bitcoin and Broader Market Trends
Bitcoin (BTC) mirrored this downward trend, falling nearly 5% to trade near a one-week low of $66,300.
The market decline began on Wednesday afternoon following the Federal Reserve’s hawkish policy meeting. The U.S. central bank maintained its benchmark fed funds rate range at 5.25%-5.50% but surprised investors with updated projections indicating just one 25 basis point rate cut in 2024. This was contrary to rate futures markets, which had been pricing in two to three 25 basis point cuts this year.
Economic Data Impact
Further dampening the macroeconomic sentiment in the crypto market was Thursday morning’s U.S. economic data, which suggested ongoing softening in both inflation and the economy. The May Producer Price Index (PPI) fell 0.2%, against expectations of a 0.1% rise. Year-over-year, the PPI increased by 2.2%, below the forecasted 2.5%. Additionally, initial jobless claims rose to nearly a one-year high of 242,000, surpassing the expected 225,000.
Market Analysis and Outlook
“66K seems like equilibrium,” noted well-followed analyst Skew in an X post. Analysts, including Skew, are trying to decipher a market that remains resistant to sustained upward momentum despite several bullish developments. These include improving inflation data, the prospect of a Bitcoin-friendly presidential frontrunner in Donald Trump, anticipated approvals for spot ETH ETFs, and U.S. stock markets hitting new all-time highs.
Overall, the cryptocurrency markets are grappling with a complex mix of regulatory signals, economic data, and investor sentiment, contributing to the current volatility and uncertainty.
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