Bitcoin (BTC) along with major altcoins traded lower on Tuesday as investors across the globe waited for a decision on the United States Federal Reserve’s monetary policy outcome, later this week.
Worries about an economic downturn, concerns about the banking sector crisis, and an increasingly bearish narrative building around the U.S. dollar have kept investors and traders on edge. In the wake of such a financial predicament, the traditional financial market along with the cryptocurrency market tanked sharply, over the past 24 hours.
U.S. stock futures dipped, following the failure of First Republic Bank over the weekend, the fourth bank failure in the U.S. this year following Silvergate, Silicon Valley, and Signature banks. The Dow Jones Industrial Average futures lost 0.11%, the S&P 500 futures index dipped 0.14%, while the Nasdaq-100 futures dropped 0.15%. In tandem with the broader financial market, the digital assets industry also took a hit.
Bitcoin Falls Ahead Of Crucial Monetary Policy
According to CoinMarketCap, Bitcoin (BTC) is down 1.94% in the last 24 hours to hover around $28, 068, down from the weekend high of $29,900. Bitcoin’s dominance also fell 0.23% in the past 24 hours to 46.68%. In the early hours of Tuesday, the alpha coin had slipped below the $28K mark, following a brief rally in the last week of April. The surge was led by First Republic Bank’s $100 billion deposit loss, raising banking stability concerns.
Earlier this year, the shuttering of Silicon Valley Bank (SVB), Signature Bank, and Silvergate Capital Corp., helped Bitcoin (BTC) along with the overall crypto market to gain substantially. Several experts predicted the banking crisis boosted investor confidence in crypto against the monopolistic traditional financial ecosystem. It helped to rekindle the debate on the importance of crypto and decentralized finance (DeFi).
Investors have been expecting a slowdown from Bitcoin’s first-quarter rally, although the cryptocurrency gained about 70% since the onset of the New Year. Edul Patel, CEO and Co-Founder of crypto platform Mudrex explained the flagship token started the week by trading in the red, as investors gear up for a crucial week of US economic events. He said,
“Market participants are closely monitoring the Federal Reserve’s interest rate hikes, which are expected to be announced on Wednesday, as well as the non-farm payroll data for April, which will be released on Friday. We might see some volatility in the market this week.”
Another Rate Hike
Analysts suggested that, the Fed may lift interest rates by another quarter point when they meet for their next rate-setting meeting in May. According to a Reuters poll of economists, the US Federal Reserve will deliver a final 25-basis-point interest rate increase in May and then hold rates steady for the rest of 2023. The poll also showed that a short and shallow US recession is likely this year. Meanwhile, Greg Mcbride, a financial analyst, said,
“This could be the Fed’s last rate hike for a while, but we’ll have to wait and see. If inflation were still trending upward, tighter credit or not — the Fed would keep raising rates.”
On the flip side, Bitcoin’s 2.97% increase over the past seven days indicated its ability to withstand market fluctuations and remain stable. Bitcoin has rallied so far this year, rising above $30,000 in April for the first time in ten months.
The digital token’s recent four-month winning streak through April marked the longest stretch of gains since the six-month advance leading up to March 2021. Recently, banking giant, Standard Chartered doubled down on Bitcoin (BTC) noting the digital token could reach $100,000 by the end of 2024.
Altcoins Traded Lower
At the same time, Ethereum (ETH) shrank 0.76% in the last 24 hours to trade at $1,834. Ether’s price has now retraced back to values seen in early April and has given up most of the gains related to the Shanghai hard fork on April 12. In the company with the two crypto heavyweights, the top ten altcoins also traded in the red.
XRP and Cardano (ADA) fell 0.33% and 0.44% in the last 24 hours, respectively. Simultaneously, Polygon (MATIC) and Polkadot (DOT) dropped in the range between 2.03% and 2.40%. Solana (SOL) spiraled down 1.27% in the last 24 hours to trade at $21.96. Alex Thorn, head of firmwide research at Galaxy suggested,
“Overall, the market lacks clear positive near-term catalysts, with supply issues overhanging Bitcoin. That being said, bitcoin accumulation by small addresses is outpacing issuance, and we expect Ethereum staking to increase, each of which provides a supportive supply narrative.”
