Cryptocurrency and US Equities Dip as Inflation Persists: Analysis and Predictions
Cryptocurrencies and US equities took a hit on Tuesday as the latest wage data confirmed that inflation is persisting ahead of the Federal Reserve’s interest rate decision. Bitcoin and ether saw losses of around 3% and 5% over a 24-hour period, erasing gains from the previous day.
Analysts are attributing the dip to lower-than-expected trading volumes for spot bitcoin and ether exchange-traded products in Hong Kong, which debuted this week. Mike Tauckus, head of trading and structuring at BitOoda, noted that initial expectations for inflows were around $300 million, but actual volumes only amounted to $11 million.
In comparison, spot bitcoin ETFs in the US saw more than $4.5 billion in day-one trading volumes earlier this year. The disappointing ETF volumes out of Hong Kong led to a dramatic selloff in the crypto market.
Stocks were also in the red on Tuesday, with the S&P 500 and Nasdaq Composite indexes down 0.7% and 0.4%, respectively. The wage data from the US Bureau of Labor Statistics showing a 4.4% year-over-year increase in wages and salaries last month has traders concerned about persistent inflation.
The Federal Reserve’s Open Market Committee meeting began on Tuesday, with central bankers set to reveal their interest rate decision on Wednesday afternoon. Market expectations for a rate cut this cycle are low, with Fed fund futures showing only a 0.5% chance.
As for bitcoin, Tauckus believes the crypto is currently in the clear, but a dip below $60,000 could lead to a more sustained selloff, potentially dropping to $53,000. Traders are anxiously awaiting the Fed’s decision and hoping for clarity on the future of interest rates in light of ongoing inflation concerns.
