By Francisco Rodrigues (All times ET unless indicated otherwise)
Global markets are on standby as investors anticipate the Federal Reserve’s forthcoming policy announcement, scheduled for later today. A consensus among analysts suggests the Fed will lower interest rates by 25 basis points, but the focus will predominantly be on Chair Jerome Powell’s remarks regarding the central bank’s future policy direction.
The cryptocurrency sector mirrors this cautious sentiment. Over the past 24 hours, the CoinDesk 20 (CD20) index has remained almost stagnant, rising only 0.2%. Bitcoin (BTC) has seen a modest increase of approximately 1%, trading around $116,267.99. Conversely, gold, after reaching a historic price of $3,700 earlier this week, has experienced a slight decline of 0.5%. The U.S. dollar index has managed a marginal increase of less than 0.2%.
Equity markets reflect similar hesitation, with U.S. stocks experiencing a slight downturn yesterday, while European shares advanced minimally. The FTSE All-World Index noted an uptick of less than 0.1% today.
However, in a broader context, cryptocurrencies have noticeably trailed behind equities. Over the past month, the FTSE All-World Index has increased by 2.78%, compared to a 2.6% increase in the CoinDesk 20 and a 1.6% rise in Bitcoin. These figures indicate an aura of caution ahead of the anticipated rate cut, which could enhance the appeal of riskier assets.
Market participants are currently factoring in six potential interest rate reductions – three anticipated this year and an additional three in the following year. According to analysts at QCP Capital, “Market expectations are positioned in a Goldilocks range: six cuts represent a middle ground between caution and aggression.”
They further commented, “Any deviation in the dot plot could disrupt this balance, necessitating a reassessment of the risk associated with potentially tighter conditions or a Fed struggling to address weakening growth.”
The real challenge for markets will be Powell’s upcoming press conference. A well-balanced message from the Fed is likely to bolster risk assets, while any uncertainty may compel investors to rethink their strategies.
Despite the prevailing market apprehension, demand for spot crypto exchange-traded funds (ETFs) has shown resilience. Recently, net inflows for spot Bitcoin ETFs have totaled around $550 million, while spot Ether ETFs attracted nearly $300 million.
What to Watch:
– Sept. 17, 9:45 a.m.: Canada’s benchmark interest rate decision, expected to remain at 2.5%, followed by a press conference.
– Sept. 17, 2 p.m.: U.S. Fed’s interest rate decision, expected to include an updated dot plot with an anticipated 25 basis point cut to 4.00%-4.25%, followed by a press conference.
– Sept. 17, 5:30 p.m.: Brazil’s benchmark interest rate decision is expected to sit at 15%.
Earnings (Estimates based on FactSet data):
Token Events:
– Governance votes & calls
– Unlocks
– Sept. 17: ZKsync (ZK) will unlock 3.61% of its circulating supply, valued at approximately $10.54 million.
Market Performance:
Bitcoin continues to trade within a narrow range, seeing only a slight increase to around $116,000 in the last 24 hours without significant momentum for a breakout. Altcoins are benefiting from this subdued volatility, showing increased activity that led to Bitcoin dominance dipping to an eight-month low of 57%, as noted by CoinMarketCap.
This metric is often utilized to understand whether investment is flowing into Bitcoin or into riskier altcoins. With the average crypto token’s Relative Strength Index (RSI) standing at 45.47, altcoins appear to be nearing an “oversold” condition, suggesting potential for a price recovery.
Future developments in Bitcoin’s performance will be critical, particularly if it attempts to approach its all-time high of $124,000. A significant breakout accompanied by strong trading volumes could rekindle investor interest in the leading cryptocurrency.
The week also saw BTC futures open interest climbing to $32 billion across major trading platforms, highlighting ongoing investor engagement in the derivatives markets.
