Crypto Jitters: Rate Hike Fears Sink Bitcoin, Ethereum & XRP

Cryptocurrencies, including Bitcoin, Ethereum, and XRP, faced downward pressure early Wednesday, as investors awaited the Federal Open Market Committee’s (FOMC) decision regarding monetary policy.

Market sentiment strongly suggests that the U.S. central bank will choose to hold interest rates steady. According to the CME FedWatch Tool, there’s a 97% likelihood of no change. Federal Reserve Chairman Jerome Powell is scheduled to deliver his remarks around 2 PM Eastern Time.

The price of Bitcoin recently traded at $117,700, reflecting a 0.4% decrease over the last 24 hours. Data from CoinGecko indicates that Ethereum and XRP have declined by 1% and 0.9%, respectively, compared to the same time on Tuesday.

The overall cryptocurrency market capitalization has decreased by 5.4% within the past 24 hours, now valued at $3.9 trillion.

Analysts from QCP Capital, a Singapore-based crypto asset management firm, stated that they will closely monitor U.S. Federal Reserve actions and employment statistics this week. These indicators are seen as significant predictors for the third quarter.

“With the impact of tariffs potentially affecting corporate profit margins and consumer prices, the third quarter could represent a notable turning point,” they wrote in a Wednesday report. “All eyes are focused on the Federal Reserve. We anticipate a hold during the July FOMC meeting, with policymakers likely emphasizing data dependency ahead of the crucial September meeting, where the possibility of a rate cut remains delicately balanced.”

Dean Chen, an analyst at the Bitunix crypto exchange, pointed out the growing disagreements within the Federal Reserve concerning rate cuts, even as it maintains a cautious approach.

Federal Reserve Governor Christopher Waller mentioned during a speech in New York City that he supports lowering rates in July. Michelle Bowman, recently appointed as Vice Chair for Supervision, has also indicated her support for a rate reduction.

“Increased policy divergence is creating uncertainty in the short term,” Chen noted in a report shared with Decrypt. “Bitcoin is anticipated to trade within a defined range. Investors are advised to carefully monitor this consolidation range and await clearer policy indications before initiating new strategic actions.”

Despite macroeconomic and policy anxieties, inflows into Bitcoin and Ethereum ETFs have shown resilience.

According to Farside Investors, deposits for BTC funds decreased to $80 million after reaching $157 million on Monday, but remained positive for the week overall. Ethereum funds have accelerated since the beginning of the week, rising from $65 million on Monday to $218 million on Tuesday.

BlackRock’s iShares Ethereum Trust, trading under the ETHA ticker, has surpassed the three million ETH mark in its holdings. At the time of this writing, the value of its ETH holdings is slightly above $11 billion based on current prices.