Bitcoin, Ethereum, XRP, and other major cryptos slumped on Wednesday morning ahead of the Federal Open Markets Committee’s monetary policy decision.
Investors seem overwhelmingly sure the U.S. central bank will keep interest rates unchanged, according to the CME FedWatch Tool, which shows a 97% probability that the U.S. central bank will hold. Federal Reserve Chair Jerome Powell is expected to deliver his remarks around 2 p.m. Eastern Time.
The Bitcoin price was recently trading at $117,700, down 0.4% over the past 24 hours. Ethereum and XRP has fallen 1% and 0.9% from Tuesday, same time, according to price aggregator CoinGecko.
The global crypto market cap has sunk 5.4% in the past day and now stands at $3.9 trillion.
Analysts at Singpore-based crypto asset manager QCP Capital said they’ll be watching the U.S. Fed and employment figures this week as strong predictors of the third quarter.
“With tariff effects set to feed into corporate margins and consumer prices, Q3 could mark a meaningful inflection point,” they wrote in a Wednesday note. “All eyes are on the Fed. We expect a hold at the July FOMC, with policymakers likely to emphasize data dependence ahead of the critical September meeting, where odds for a rate cut remain finely balanced.”
Dean Chen, an analyst at crypto exchange Bitunix, noted that there’s growing division within the Fed about rate cuts even as it has remained cautious.
Federal Reserve Governor Christopher Waller said during a speech in New York City that he supports cutting rates in July. And the newly appointed Michelle Bowman, who’s now Vice Chair for Supervision, has also signaled she’s supportive of a cut.
“Rising policy divergence is increasing short-term uncertainty,” Chen said in a note shared with Decrypt. “BTC is expected to remain range-bound. Investors are advised to closely monitor the consolidation range and wait for clearer policy signals before making new strategic moves.”
Despite the macro and policy concerns, Bitcoin and Ethereum ETF flows have remained steady.
Deposits for BTC funds slowed to $80 million after amounting to $157 million on Monday, and remained well in the green for the week, according to Farside Investors. ETH funds have accelerated since the start of the week, going from $65 million on Monday to $218 million on Tuesday.
BlackRock’s iShares Ethereum Trust, which trades under the ETHA ticker, just surpassed the three million ETH threshold in its holdings. At the time of writing, its ETH holdings are worth just north of $11 billion at current prices.