In the latest updates from the financial markets, Bitcoin has taken a downturn, trading at approximately $109,800 as the market reacts to recent comments made by Federal Reserve Chair Jerome Powell. His remarks indicated uncertainty surrounding future rate cuts, affecting demand for Bitcoin exchange-traded funds (ETFs) and other risk assets. The sentiment has shifted significantly, leading Polymarket traders to assign a 71% probability of a 25-basis-point rate cut during the Fed’s December meeting, a notable decline from the 90% observed prior to Powell’s statements. Interestingly, the likelihood of no change in rates has increased to 26%, reflecting a rapid recalibration of expectations among traders.
Recent data from CryptoQuant highlights a sharp decrease in U.S. investor demand for cryptocurrencies. Over the past week, spot Bitcoin ETFs experienced outflows averaging 281 BTC, marking one of the lowest readings since April. Ether inflows have nearly come to a standstill, while premiums on platforms like Coinbase for both Bitcoin and Ether have almost flattened. Furthermore, the CME futures basis has dropped to multi-year lows, signaling a trend where both institutional and retail traders appear more inclined to take profits rather than increase their exposure to the market.
On-chain analytics from Glassnode further illustrate the decline in market conviction. Bitcoin’s price struggles below the cost basis for short-term holders, estimated at around $113,000. Additionally, long-term holders are distributing roughly 104,000 BTC monthly, with transfer volumes to exchanges rising to $293 million daily, indicating that seasoned investors are cashing out amidst weakening demand.
The broader cryptocurrency market mirrors this sentiment, with Solana experiencing an 8% drop despite the launch of its first U.S. spot ETFs. Bitwise’s BSOL managed to attract $116 million in its first two days, while Grayscale’s GSOL raised $1.4 million. However, the declining price of Solana has erased its year-over-year gains. The market additionally witnessed large on-chain transfers from Jump Crypto to Galaxy Digital, spurring speculation about possible portfolio rebalancing.
In the face of this subdued volatility and balanced trading positions, all eyes are now on the Federal Reserve’s next moves. Current Polymarket odds suggest a 55% probability of no change in rates, reflecting a slight uptick following Powell’s remarks. As the U.S. government prepares to officially re-open and releases further economic data, any signs of worsening conditions could influence Powell’s stance, thereby impacting cryptocurrency traders.
The movement across various assets has been noteworthy. Bitcoin fell about 5% within the last 24 hours, relinquishing earlier weekly gains in response to Powell’s comments and the decline in U.S. ETF inflows. Ether also saw a 1.8% decrease to about $3,850, contributing to a month-long decline as spot ETF activity subsided.
In the commodities market, gold prices dipped by $16.50, settling at $3,984.70, while silver slipped to $47.89. Powell’s hawkish commentary post-Fed rate cut contributed to this decline, as hopes for additional easing waned and Treasury yields increased.
On a brighter note, Asia-Pacific stock markets saw gains, with the Nikkei 225 climbing over 1% to reach a new record, buoyed by easing trade tensions between Trump and Xi in South Korea.
Other notable developments in the crypto sphere include lawsuits against Drake and Adin Ross over deceptive promotion of the crypto casino Stake, and the successful launch of a UFC-endorsed FIGHT token sale that exceeded its target by raising $183 million. Additionally, Western Union has filed a trademark for ‘WUUSD’ just a day after the unveiling of the USDPT stablecoin.
