Barring a few exceptions, the crypto market continued to remain under pressure on Monday. Bitcoin (BTC) and Ethereum (ETH) tanked further as investors and traders act with caution ahead of the United States Federal Open Market Committee (FOMC) minutes of the meeting later this month amid the US regulatory and debt challenges.
How Is The Current Market Conditions?
The cryptocurrency sector pulled back from 2023 highs in May as the U.S. Securities and Exchange Commission (SEC) and other global regulators tightened the screws on digital assets, including a US Fed hike rates by 25 basis points and other macroeconomic headwinds. The May rate hike was the tenth straight rate increase by the US Fed after it started raising rates to tame inflation which has come down to under 6% from a high of 9.1% witnessed last year.
Even after starting the New Year on a boisterous note, the digital assets industry is now witnessing a neutral and dull momentum as potential investors seek more clarity on the U.S. debt ceiling issue which has weighed down the financial market. However, investors expect the Federal Reserve to take a breather at the upcoming Fed meeting later this month.
It seems they will be paying close attention to how high the FOMC now sees interest rates rising in 2023 and how low committee members believe rates could fall in 2024 once the Fed eventually pivots to rate cuts. In a statement, Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory, asset management, and fintech organizations said,
“Investors around the world will be delving into the minutes of the meeting to look for hints about whether the world’s most influential central bank will hike interest rates for the 11th consecutive time in June. Despite inflation remaining high, and continuing tightness in the labor market, there’s a growing sense that the Fed is now likely to pause its rate-hiking agenda.”
Bitcoin and Ethereum Plummet
According to CoinMarketCap, Bitcoin (BTC) is trading lower on Monday as the largest digital asset shed more than 1%, falling below the $27,000 mark during the early day. At the time of writing, the flagship token is hovering at $26,790. Meanwhile, over the past seven days, the top cryptocurrency shrank more than 4%. Bitcoin’s dominance over the last 24 hours spiraled down 0.04% to currently stand at 45.85%.
The downward trend comes after BTC surpassed the $27,000 mark following a positive job report from the US, during the weekend. It seems investors are now anticipating the release of the next FOMC meeting minutes slated to happen on June 13-14.
Similarly, its largest peer, Ethereum (ETH) dropped nearly 2% in the last 24 hours to trade at $1,870. The second largest digital asset is down 1.72% over the past week as the current balance of Ethereum on exchanges reached a 5-year low. The latest data from Glassnode indicated that the current balance of ETH on exchanges stood at approximately 17.2 million, marking the lowest point witnessed in the past five years.
— glassnode alerts (@glassnodealerts) June 3, 2023
Limited Near Upside For Crypto
As per the data from CoinMarketCap, the global crypto market cap slipped 0.80% in the last 24 hours. to $1.13 trillion. Furthermore, in tandem with with a broader crypto market, major altcoins also declined barring a few exceptions. Cardano (ADA), Solanan (SOL), Polygon (MATIC) and Polkadot (DOT) fell over 1% in the last 24 hours.
Dogecoin (DOGE) and Shiba Inu (SHIB) also took a hit, dipping 1.72% and 1.42%, respectively. On the other hand, XRP, Tron, and Avalanche (AVAX) jumped in the range between 1% and 3%, in the same time frame. In the current macroeconomic climate, Bank of America analyst Alkesh Shah noted there may be a imited near-term upside for crypto prices heading into June. He added,
“Low conviction, limited catalysts, and outperformance year-to-date (YTD) leave the digital asset sector stuck in a trading range with a challenging macro backdrop likely capping digital asset upside.”