The cryptocurrency market remained in a state of flux on Thursday, as the anticipation for the Federal Reserve’s widely expected interest rate cut continued to build. Despite the buzz, leading cryptocurrencies like Bitcoin and Ethereum exhibited choppy trading patterns, with no clear directional bias emerging.
Bitcoin oscillated within a tight range between $57,700 and $58,400, while Ethereum dipped to $2,300 early in the day before reclaiming the $2,350 mark overnight. The overall market displayed a sense of calmness, with liquidations reaching only slightly over $63 million in the past 24 hours. Interestingly, the number of leveraged bets on both the upside and downside were roughly equal, indicating a degree of uncertainty among traders.
The announcement of former President Donald Trump’s cryptocurrency project launch date failed to generate any significant market impact. Meanwhile, the funding rate for Bitcoin on prominent exchanges like Binance and Bybit turned negative, suggesting a dominance of bearish leveraged traders. This trend was further highlighted by a noticeable decline in the Long/Short Ratio for the cryptocurrency.
Despite the mixed signals, the global cryptocurrency market experienced a slight increase of 0.46% over the past 24 hours, reaching a total valuation of $2.04 trillion.
In the broader financial landscape, stocks continued their upward trajectory, with the S&P 500 gaining 0.75% to close at 5,595.76. The tech-heavy Nasdaq Composite followed suit, adding 1% to end at 17,569.68. The Dow Jones Industrial Average also climbed, gaining 235.06 points or 0.58% to finish at 41,096.77.
Investor sentiment was influenced by the release of August’s producer inflation data, which revealed a sharper-than-anticipated slowdown in the headline producer price index. While core inflation remained stable, the report came on the heels of consumer price index data indicating an increase in core prices.
Based on the current data, investors now estimate a 59% chance of a 25-basis-point rate cut at the upcoming FOMC meeting scheduled for next week. However, expectations for a more aggressive 50-basis-point rate reduction have also risen to 41%, according to the CME FedWatch tool.
Notably, prominent analytics firm Santiment observed a surge in bullish commentary surrounding Bitcoin over the past week. The ratio of positive mentions for Bitcoin was more than double the number of negative mentions, marking the first time this has happened in over a year. Santiment viewed this heightened enthusiasm as a potential cause for concern, hinting at a potential market peak. The on-chain researcher cautioned that when investor sentiment shifts back to doubt, Bitcoin might face challenges in testing its March all-time high market values.
Renowned cryptocurrency analyst and trader Ali Martinez highlighted Bitcoin’s prolonged movement below its 200-day moving average, a key technical indicator. Martinez pointed out that Bitcoin’s extended stay below this critical level, at $64,000, for over a month, suggests a potential decline towards its realized price of $31,500. Historically, Bitcoin’s trading above its 200-day moving average has been associated with strong returns, while dropping below it often leads to sharp corrections.
As the cryptocurrency market navigates this period of uncertainty, investors and traders alike are closely monitoring the upcoming interest rate decision and the evolving market dynamics. The potential for a shift in sentiment and a potential downward correction remains a key factor for market participants to consider.
