Cryptocurrency Markets Experience Minor Rebound Amid Fed Rate Cut Hopes
In a refreshing turn of events, cryptocurrency markets staged a minor rebound over the past 24 hours, sparked by renewed optimism regarding a potential rate cut by the Federal Reserve (Fed) in December. As traders keep a keen eye on economic signals, the implications of such decisions loom large over the crypto landscape.
Upcoming Federal Reserve Decision
The Federal Reserve’s next interest rate decision is just around the corner, scheduled for December 10. At this crucial meeting, the Federal Open Market Committee (FOMC) faces the challenging choice between executing another interest rate cut to bolster the labor market or maintaining the current rates to combat inflationary concerns. Recent FOMC minutes have pointed to a divided Fed, with dovish comments from various officials contributing to heightened expectations for a rate cut.
Rate Cut Expectations Growth
Over the past week, the expectation of a quarter percentage Fed rate cut has surged, currently sitting at about 80.9% according to the CME FedWatch tool. This marks a slight decline from the previous day’s figure of 84.4% but reflects a significant rise from only 50.1% just a week prior, illustrating the shifting sentiments in the market.
Cryptocurrency Market Performance
As the crypto markets adjusted to these changing economic prospects, the total market capitalization reached an impressive $2.99 trillion, registering a 1.78% gain overnight. The trading volume also saw an increase of 11.5%, rising to $150 billion. Among the top 100 cryptocurrencies, 66 experienced gains of more than 1%, while 9 saw losses of over 1%.
Leadership in Cryptocurrency Gains
Examining the top non-stablecoin cryptocurrencies, we find that XRP, BNB, TRON, Hyperliquid, and Bitcoin Cash all recorded year-to-date gains. Conversely, Bitcoin, Ethereum, Solana, Dogecoin, and Cardano are currently experiencing losses for the year. This variation highlights the volatile nature of the market and the differing trajectories of various digital assets.
Impact of Dollar and Gold Prices
Interestingly, the rebound in the cryptocurrency market coincided with a mild decline in the strength of the U.S. dollar and Gold Futures. The Dollar Index, which measures the dollar against a basket of six currencies, fell to 100.07 from 100.14, signaling a potential shift in investor confidence. Gold Futures for February delivery also dipped by 0.17%, trading at $4,162.95 per troy ounce.
Bitcoin’s Current Standing
Bitcoin, the flagship cryptocurrency, gained 1.5% in the last 24 hours to trade at $87,219.07. Despite this positive movement, it remains about 31% below its all-time high of $126,198.07 recorded on October 7. The original cryptocurrency has faced challenges, grappling with weekly losses of 4.5% and year-to-date losses of 6.6%.
ETF Outflows and Inflows
Market activity revealed that Bitcoin Spot ETF products in the U.S. recorded outflows of $151 million on Monday, moving away from inflows of $238 million just a few days prior. The iShares Bitcoin Trust (IBIT) was notably affected, constituting a significant portion of the outflows.
On the other hand, Ethereum saw a more positive outlook with a surge of 3.5%, bringing its price to $2,892.84. Ethereum’s Spot ETF products experienced inflows that soared to $97 million on Monday, up from $56 million on Friday, with the iShares Ethereum Trust ETF (ETHA) leading the way in contributions.
Cryptocurrency Rankings
In the rankings of global assets by market capitalization, Bitcoin has slipped to the 9th position, while Ethereum ranks at 43rd. XRP, however, surged impressively, gaining 7.5% to reach $2.19, solidifying its position as the 4th ranked cryptocurrency.
Other Notable Movers
Among the contenders, BNB saw a modest rise of 1.2%, trading at $852.09, while Solana led the pack with a notable jump of 5.4% to $135.99. Conversely, TRON experienced a minor setback, slipping 1.5% to $0.2722.
Dogecoin and Cardano also rounded out the top ten with gains of 2.7% and 2.5%, trading at $0.1484 and $0.4161, respectively.
Among lesser-known cryptocurrencies, Kaspa (KAS) emerged as a standout, leading overnight gains with a surge of 21.8%. Meanwhile, Zcash (ZEC) faced challenges, topping overnight losses with a decline of 5.8%.
Fund Flow Insights
The cryptocurrency markets are also digesting information from the CoinShares Digital Asset Fund Flows Weekly Report, which highlights a concerning trend in outflows. The report indicates that during the week ending November 21, there were outflows totaling $1.94 billion, marking the third-largest outflow since 2018, and the fourth consecutive week of negative flows. Year-to-date inflows have tumbled to $44.4 billion, with total assets under management decreasing to $167.3 billion.
Sector-Specific Flows
Notably, Bitcoin-based products led the outflows with a staggering $1.3 billion, followed by Ethereum-based products with $589 million. In contrast, XRP-based products recorded inflows of $89 million, bucking the overall trend.
Conclusion on AUM Dynamics
Amidst the outflows, iShares ETFs emerged as a notable provider with cumulative assets under management (AUM) of $75.1 billion, despite year-to-date outflows exceeding $3.1 billion. Grayscale Investments reported inflows of $114 million, a noteworthy detail given the overall trend.
As the broader markets navigate these tumultuous waters, investors remain acutely aware of the potential impact of the upcoming Federal Reserve decision, which could further affect market sentiments in the cryptocurrency sector.
