A risk-off sentiment in broader financial markets, especially stocks, also spilled over into crypto, driving down prices across the board. Anticipation of more signals from the Federal Reserve and key inflation data this week kept traders on edge.
Bitcoin fell 0.6% to $62,564.0 by 09:00 ET (13:00 GMT).
Strength in the dollar weighed on crypto markets, as the greenback remained in sight of recent seven-week peaks.
The dollar surged after nonfarm payrolls data released last week showed the U.S. labor market remained strong, potentially eliciting a slower pace of rate cuts from the Fed.
Traders were seen pricing in an 81% chance for a 25 basis point cut in November, and a 19% chance for no changes to rates, CME Fedwatch showed. Traders were also seen positioning for a higher terminal rate.
A slower pace of rate cuts means that U.S. rates will stay high for longer, which bodes poorly for speculative assets such as crypto.
Focus this week was on more cues on U.S. interest rates. The minutes of the Fed’s September meeting are due on Wednesday.
The central bank had cut rates by 50 bps and marked the beginning of an easing cycle, although it still signaled future rate cuts will be dependent on data.
To that end, consumer price index inflation data is due on Thursday and is likely to factor into the outlook for interest rates.
A slew of Fed officials are also set to speak in the coming days.
Among broader crypto prices, most altcoins fell tracking Bitcoin, while also reversing course from a weekend rebound.
World no.2 crypto Ether fell 1.5% to $2,427.7, while SOL, XRP and ADA lost between 1.5% and 2.1%. MATIC fell 2%, while among meme tokens, DOGE lost around 3.5%.
Still, crypto markets marked some gains in recent sessions, especially amid increased bets on a Donald Trump victory in the 2024 presidential elections.
Crypto betting platform Polymarket showed Trump leading Vice President Kamala Harris 53% to 46.2%.
Trump has maintained a pro-crypto stance, while Harris is expected to continue a regulatory crackdown against crypto.
Strong U.S. jobs data and positive developments in the FTX creditor repayment process are keeping a bullish outlook for Bitcoin in Q4, despite the recent market downturn amid Middle East tensions, analysts at K33 said in a note.
Nearly two years after FTX’s collapse, the U.S. Bankruptcy Court for the District of Delaware approved the exchange’s reorganization plan in a Monday hearing, moving creditor repayments closer.
K33 analysts expect payouts to begin later this quarter or early Q1 2025, within a 60-day window of the court’s effective date, anticipated for mid-November.
“Debtors will have 60 days to repay individual customers with claims under $50,000, representing approximately $1.2 billion worth of assets. Larger creditors (entitlement class) are expected to receive their $9 billion payouts in February 2025,” they noted.
The analysts also discussed how much of the repayments could reenter the market, particularly since crypto assets have already been converted to fiat. Of the $14.4 billion to $16.3 billion in claims, they estimate $3.9 billion is held by credit funds, unlikely to impact the market. Around 33% of the remaining claims are held by sanctioned countries, insiders, and those without KYC verification who cannot claim.
They project around 20% to 40% of the remaining $8 billion could be deposited back into crypto markets, or about $2.4 billion. However, this would likely happen “in multiple waves throughout the next year,” with only a soft impact on the market.
Ambar Warrick contributed to this report.
Source: Cryptocurrency - investing.com
