Raise, Pause Or Ease? Cryptos Drop Amidst Renewed Fed Fears

Cryptocurrencies dropped more than a percent in the past 24 hours as markets wait eagerly for the outcome of the Fed’s review due on Wednesday.

Markets had till recently, mostly resigned to the prospect of a 50-basis points rate hike, when the rude shock of a banking crisis that saw three U.S. banks vanish, led to a reassessment of the Fed’s likely moves.

Even though recent concerns surrounding the banking sector have faded, financial stability concerns linger and markets are hoping that the Fed would oblige with a softer hike, if not a pause or an outright cut.

However, markets are wary of the challenging tradeoff that the Fed has landed itself in, given that inflation remains well above the Fed’s target. The European Central Bank sticking to its committed rate hike of 50 basis points in the backdrop of persistent inflation is fresh in market’s memory.

The CME FedWatch Tool, an indicator of market expectations currently shows an 83% probability for a quarter percent hike whilst the remaining 17% probability is assigned to a status quo decision. A higher rate hike or a cut in rates is not currently priced into market expectations. It was 69% probability for a quarter percentage hike and 31% probability for a pause, around a week earlier.

Amidst the rate hike speculation, the Dollar Index (DXY) which measures the Dollar’s strength against a basket of 6 currencies has decreased 0.22 percent overnight and is hovering near the 103 level.

Market leader Bitcoin (BTC) is trading 0.22 percent lower on an overnight basis. At its current price of $28,234.73, the lead cryptocurrency is holding on to gains of 7.7 percent on a weekly basis and 69 percent on a year-to-date basis. The digital asset which has been the biggest gainer since the emergence of U.S. banking woes, has increased its crypto market share of close to 46.5 percent.

Ethereum (ETH), the lead alternate coin has gained 1.5 percent on an overnight basis. At its current price of $1,813.57, the leading alternate coin has accumulated gains of 3.3 percent on a weekly basis and 50 percent on a year-to-date basis. Market share of the Ether is currently 18.8 percent.

4th ranked BNB (BNB) has dropped less than a percent in the past 24 hours.

6th ranked XRP (XRP) withstood the bearish sentiment to rise more than 3.6 percent overnight amidst Ripple Labs filing a new notice supporting Fair Notice Defense against the SEC.

7th ranked Cardano (ADA) edged up 0.33 percent overnight and is the highest ranking crypto to trade with weekly losses. ADA has shed close to 5 percent in the past week.

8th ranked Polygon (MATIC) and 9th ranked Dogecoin (DOGE) edged up less than a quarter percent whereas 10th ranked Solana (SOL) dropped more than 3 percent in the past 24 hours.

76th ranked XDC Network (XDC) surged more than 20 percent in the past 24 hours. The crypto coin of the enterprise-grade, Ethereum Virtual Machine compatible blockchain equipped with interoperable smart contracts has rallied 44 percent in the past 7 days and 68 percent in 2023.

47th ranked Immutable (IMX), 63rd ranked Synthetix (SNX) and 79th ranked BitTorrentNew (BTT), all declined more than 6 percent in the past 24 hours.

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