Crypto Market Weakens, Investors Monitor Fed Policy And Regulatory Sentiment
Bitcoin (BTC) continued its decline on Monday (August 18th), trading near $115,000 after hitting a new record earlier in the month. Selling pressure was triggered by investor profit-taking and diminished expectations of an aggressive Federal Reserve (Fed) interest rate cut. Stronger-than-expected US producer price inflation (PPI) and retail sales data last week reduced the chances of a Fed rate cut by 50 basis points, leading the market to lean more toward a moderate 25 basis point cut in September.
Ethereum (ETH), the second-largest cryptocurrency, also came under pressure, falling below $5,400, as investors shifted funds to lower-risk assets amid macroeconomic uncertainty. However, ETH's medium-term prospects remain supported by the development of the DeFi ecosystem and the adoption of Layer-2 networks, which continue to see increasing transaction volumes. Meanwhile, Solana (SOL) held up better than other major altcoins, supported by surging interest in NFT-based applications and memecoins based on its network.
On the other hand, Bitcoin's market dominance fell to 59.4%, its lowest since 2020. This decline reflects increased investor interest in major altcoins such as XRP and BNB, which are relatively more stable. Some analysts believe this rotation indicates investors are seeking diversification beyond BTC, particularly given the increased volatility at near-record highs.
Regulatory-wise, crypto market sentiment remains supported by positive news from the United States, where several crypto-based investment products have received approval for inclusion in retirement portfolios. This further strengthens the legitimacy of digital assets as an alternative asset class in the eyes of institutional investors. However, uncertainty remains high as discussions about tax regulations and crypto ownership rules in Europe and Asia continue to pose risks to the market.
Looking ahead, investors will focus on this week's Jackson Hole symposium, where a speech by Fed Chairman Jerome Powell could potentially provide new direction for risk assets, including crypto. If the tone is more hawkish, the crypto market is likely to face further pressure. However, if Powell signals a dovish outlook for interest rate cuts, this could trigger a rapid rebound in the digital asset market, particularly Bitcoin and Ethereum. (alg)
Source: Newmaker.id
