Crypto markets are beginning the week with a notable downturn, as Bitcoin, Ethereum, and various altcoins face significant pressure. This trend persists despite the U.S. Federal Reserve’s recent decision to lower interest rates by 25 basis points.
Bitcoin has seen a sharp decline in its price, falling to $114,000 shortly after the Fed’s announcement. Traders initially anticipated that the lower interest rates would spark a rally, but volatility remains subdued, and capital inflows into Bitcoin ETFs are decelerating. Current market data reveals a significant drop in weekly Bitcoin trading volume, now at $43.7 billion—nearly 23% lower than the average. This decline indicates diminished confidence among both retail and institutional investors.
Ethereum is also experiencing headwinds, with the accumulation of assets slowing as institutions and large investors withdraw from staking. This trend is resulting in more ETH being transferred to centralized exchanges, which adds to selling pressure and increases supply. Furthermore, Ethereum’s network fees are remarkably low, at just 0.17 Gwei, placing them in the 6th percentile range, a sign of tepid on-chain activity and weak demand.
One of the primary catalysts for crypto price movements in 2024 and early 2025 has been ETF inflows. However, the latest reports suggest a downturn in Bitcoin ETF inflows, as traditional investors scale back their involvement. This slowdown poses a potential risk to cryptocurrency’s deeper engagement with Wall Street. Additionally, the cautious approach observed in stablecoin issuance and derivatives positioning indicates that investors might be bracing for volatility rather than increasing their investment.
While Bitcoin struggles, other altcoins such as Ethereum (ETH) and Ripple (XRP) are witnessing even more severe downturns, with capital increasingly shifting back into Bitcoin dominance. The Altseason Index has plummeted from 100 to a mere 67, reflecting a significant drop in momentum for smaller-cap tokens.
The macroeconomic landscape is adding to the selling pressure. Factors contributing to the current selloff include the Federal Reserve’s policy, which raises questions about future rate cuts amid persistent inflation concerns. Recent uneven inflation data has incited fears of “higher for longer” interest rates, dampening the speculative enthusiasm that typically drives investments in risk assets. Additionally, a period of profit-taking following a robust rally earlier this year has led many investors to lock in gains, further intensifying selling pressures. The global market sentiment remains weak, with shakiness in equities, bonds, and other assets feeding into the downturn of cryptocurrencies. Increased activity among large players, or “whales,” reducing their exposure has further accelerated the selling trend across exchanges.
Despite the bearish outlook, some analysts interpret the current environment as a period of calm before a potential significant move. Bitcoin’s volatility structure indicates a temporary lull, but longer-term indicators signal that traders are bracing for turbulence ahead. Interestingly, the Ethereum options market shows a shift in demand dynamics; the need for downside hedging has diminished while call options are regaining premiums. This shift may suggest that some traders are positioning themselves for a possible rebound if macroeconomic conditions stabilize.
Binance founder Changpeng Zhao also weighed in on the market sentiment, implying that the true bull market may still be on the horizon. His comments add to the ongoing speculation about whether Bitcoin’s extraordinary rally in 2025 is losing momentum.
In summary, the crypto market is currently navigating a challenging landscape, with several factors contributing to its downward trajectory. While immediate sentiment is bearish, various indicators suggest that traders might be preparing for future opportunities as they keep a close watch on macroeconomic developments.
