Oct 8 2024: Bitcoin’s price declined on Tuesday, retreating from recent highs as increasing expectations of a slower pace in U.S. interest rate cuts weighed on the market. Broader risk aversion in financial markets, especially in stocks, also spilled over into the crypto space, leading to a widespread dip in prices. Traders remained cautious, awaiting signals from the Federal Reserve and key inflation data set to be released this week.
By 01:07 ET (05:07 GMT), Bitcoin had fallen 1.4% to $62,609.1.
Bitcoin Pressured by Stronger Dollar and Slower Rate Cut Expectations
The strength of the U.S. dollar added pressure on the crypto market, as the currency neared its recent seven-week highs. The dollar’s rise followed the release of strong U.S. nonfarm payrolls data, suggesting that the labor market remains robust. This development led to growing expectations that the Federal Reserve would slow down its pace of interest rate cuts.
According to CME’s Fedwatch tool, traders are now pricing in an 81% chance of a 25 basis point rate cut in November, with a 19% chance of no rate change. There’s also anticipation of a higher terminal rate. Slower rate cuts imply that U.S. rates may remain elevated for a longer period, which is generally unfavorable for speculative assets like cryptocurrencies.
Focus Shifts to Fed Minutes and Inflation Data
This week, all eyes are on further clues about U.S. interest rates, with the minutes from the Federal Reserve’s September meeting scheduled for release on Wednesday. Although the central bank had initiated an easing cycle with a 50 basis point cut, it signaled that future rate decisions would be data-dependent.
On Thursday, the consumer price index (CPI) inflation data will be released, a critical indicator that could influence the Fed’s future moves on interest rates. In addition, several Fed officials are set to make public appearances in the coming days, which may offer more insight into the central bank’s outlook.
Altcoins Slide as Broader Crypto Market Retreats
Most altcoins followed Bitcoin’s downward trajectory, reversing their gains from a recent weekend rebound. Ethereum, the world’s second-largest cryptocurrency, dropped 2.7% to $2,420, while SOL, XRP, and ADA saw losses ranging between 2% and 4%. MATIC slipped 0.2%, and meme token DOGE plummeted nearly 5%.
Despite the current dip, crypto markets have seen some recent gains, fueled by growing bets on Donald Trump’s potential victory in the 2024 U.S. presidential election. On crypto betting platform Polymarket, Trump leads Vice President Kamala Harris by 53% to 46.2%. Trump’s pro-crypto stance contrasts with Harris, who is expected to continue regulatory crackdowns on the industry.
