Cryptocurrency markets are experiencing a downturn under the influence of Fed expectations. Cryptocurrency markets were shaken as expectations of a Fed interest rate cut diminished following strong ISM data released in the US. This led to declines in demand and value for digital assets, including Bitcoin. Investors reduced their risk appetite due to uncertainties surrounding Fed policy steps, leading to decreased interest in crypto assets.
Tokens like Pepe and dogwifhat also took a hit from this downturn, with a small digital currency index witnessing its strongest two-day decline in the past two weeks. Continued price pressures in the US boosted bond yields and the dollar, weakening the strength of cryptocurrency assets.
Stefan von Haenisch, Trading Director at OSL SG Pte, remarked, "The changing policy outlook of the Fed is causing increased selling in the crypto market. This is becoming more pronounced, especially for other assets that are outperforming Bitcoin." Richard Galvin, founding partner of DACM, noted that recent economic data portrayed the crypto market as "weak."
These developments highlight the speculative nature of cryptocurrency markets and create a more challenging environment in global markets. If uncertainties regarding Fed policy actions persist, the volatile trajectory of cryptocurrency assets may continue.