Sentiment towards crypto markets was largely constrained by fears of a mass sale event by the U.S. government, which was seen mobilizing about $2 billion worth of Bitcoin earlier this week.
A boost from crypto-positive promises from Republican presidential nominee Donald Trump also largely ran dry, after a Bloomberg poll showed Democratic frontrunner Kamala Harris wiped out Trump’s lead in seven battleground states.
Bitcoin fell 2% in the past 24 hours to $64,782.8 by 08:55 ET (12:55 GMT)
The Fed kept interest rates steady as widely expected on Wednesday, with Chair Jerome Powell flagging more progress towards cooling inflation and a softer labor market.
Powell explicitly mentioned the possibility of a September rate cut, especially in the event of more favorable data. His comments triggered a sharp rally on Wall Street.
Optimism over the Fed, coupled with positive earnings from the technology sector, kept traders largely biased towards equities, even as the prospect of lower U.S. interest rates presented a positive outlook for crypto.
Crypto markets thrive in low-rate environments, as increased liquidity benefits their speculative nature.
But beyond U.S. markets, risk appetite in other parts of the globe was less enthusiastic. Japanese markets tumbled after the Bank of Japan raised interest rates and flagged more potential increases on growing resilience in the Japanese economy. The yen surged on the BOJ’s move, which put Bitcoin at a near three-week low against the currency.
Increased geopolitical tensions in the Middle East, after the killing of a Hamas leader in Iran, also kept risk appetite frail.
Large Bitcoin holders increased their coin holdings in July at the fastest rate in years, taking advantage of the market’s two-way price volatility.
In a move that reflects their confidence in the cryptocurrency, these holders, defined as addresses with at least 0.1% of BTC’s circulating supply, accumulated over 84,000 BTC, valued at $5.4 billion at the current market price, as reported by blockchain analytics firm IntoTheBlock and TradingView. This represents the largest single-month accumulation in BTC terms since October 2014.
The accumulation trend involved bargain hunting during the early July price dip below $55,000 and intermittent pauses during the subsequent recovery to $69,000. BTC ended July with a 3% gain.
The ramp-up points to a strong belief among holders that the prolonged consolidation phase between $50,000 and $70,000 will eventually result in a bullish breakout, continuing the initial rally from $16,000.
Likewise, analysts are also increasingly optimistic about bitcoin’s future price movements.
Federal Reserve Chair Jerome Powell on Wednesday indicated that interest rates could be cut as soon as September, emphasizing that the decision would depend on economic data supporting renewed liquidity easing. The central bank kept its benchmark interest rate steady in the 5.25%-5.50% range, as expected.
“The Fed has been striving for a ‘soft landing,’ and if the data allows them to cut, and it is certainly moving in that direction relative to their forecasts, then we think they will seize the opportunity. We expect officials to start moving monetary policy from ‘restrictive’ territory to ‘slightly less’ restrictive policy from September with additional cuts in November and December,” ING analysts said in a note to clients seen by CoinDesk.
Broader crypto markets tracked a decline in Bitcoin, with XRP sliding 5.7% as it reversed course from a recent rally. The token had risen sharply on unfounded rumors that Ripple, the firm that issues XRP, was close to reaching a settlement with the Securities and Exchange Commission over a long-running lawsuit.
World no.2 token Ether fell 3.6% to $3,196.25 an ounce, while SOL and ADA lost 6% and 2.5%, respectively.
Among meme tokens, DOGE fell 3.9%.
Source: Cryptocurrency - investing.com
