As global markets hold their breath, investors and analysts are fixated on the Federal Reserve’s upcoming policy announcement scheduled for later today. The anticipation centers around a seemingly inevitable 25 basis point interest rate cut. But, as always, the devil is in the details, and all ears are tuned to Fed Chair Jerome Powell’s subsequent press conference for insights into future monetary policy directions. This vigilance extends into the cryptocurrency space, where market participants are eager to gauge how the Fed’s decisions could impact the volatile digital asset landscape.
Market Movements: A Waiting Game
In the lead-up to the Fed’s announcement, the financial atmosphere is one of cautious optimism. In the cryptocurrency realm, the CoinDesk 20 (CD20) index has seen minimal movement, inching up just 0.2% over the past 24 hours. Bitcoin (BTC), the flagship cryptocurrency, reflects a modest 1% increase, trading at approximately $116,000. Meanwhile, traditional safe-haven asset gold, which hit a record high of $3,700 earlier this week, has receded by 0.5%. The U.S. dollar index has also made a slight upward move, gaining less than 0.2%.
Equities markets tell a similar story of stagnation, with U.S. stocks dipping in the previous session and European equities edging upward. The FTSE All-World Index is up by a negligible 0.1%. Over the past month, cryptocurrencies have underperformed compared to equities, with the FTSE All-World Index climbing 2.78%, the CoinDesk 20 rising 2.6%, and BTC gaining 1.6%.
The Fed’s Influence on Crypto
The anticipated rate cut by the Federal Reserve comes amidst expectations of further monetary easing, with investors pricing in six rate cuts—three this year and three the next. According to QCP Capital analysts, the market’s expectations are in a “Goldilocks range,” balancing between prudence and assertiveness. Any deviation from this expectation, particularly regarding the Fed’s dot plot projections, could disrupt this balance, forcing investors to recalibrate around the potential for tighter-than-expected conditions or a Fed struggling to adapt to weaker growth.
Jerome Powell’s press conference is poised to be the real litmus test. A balanced message could bolster risk assets, while any sign of hesitation might prompt investors to reassess their positions. Despite prevailing uncertainties, demand for spot crypto ETFs remains robust. Notably, spot BTC ETFs have attracted net inflows of around $550 million this week, with spot ether ETFs bringing in nearly $300 million.
Crypto’s Current Dynamics
Bitcoin’s market behavior has been notably static, trading in a narrow range and showing resilience at the $116,000 mark without breaking out. This lack of volatility has allowed altcoins to seize the moment, leading to a decrease in bitcoin’s dominance to an eight-month low of 57%. The Relative Strength Index (RSI) for average crypto tokens is at 45.47, indicating that altcoins are nearing “oversold” territory, suggesting potential for an upward extension.
The previous cycles have seen bitcoin dominance fall to 33% in 2017 and 40% in 2021, indicating significant room for altcoins to maneuver. However, bitcoin’s potential to reach record highs at $124,000 could shift the narrative, drawing capital back to BTC as investors eye a potential cycle peak.
Derivatives and Investor Sentiment
In the derivatives market, BTC futures open interest has climbed to $32 billion, although the three-month annualized basis has compressed to 6-7% across major venues like Binance, OKX, and Deribit. This indicates waning bullish conviction, as traders show reluctance to pay high premiums for future exposure. The options market paints a complex sentiment picture, with the implied volatility term structure suggesting expectations of long-term volatility. Yet, the 25 delta skew chart reveals a flat or slightly negative skew for short-term options, signaling a preference for protective puts over calls.
Conversely, the 24-hour put-call volume chart shows a higher volume of calls, indicating bullish short-term expectations. Funding rate APRs across major perpetual swap venues, with BTC annualized funding at 17%, suggest a growing conviction in a bullish price direction if the trend persists.
Looking Ahead
As the crypto market awaits the Fed’s decision, the spotlight remains on Powell’s press conference for clues on future monetary policy. With the possibility of a rate cut already priced in, market participants are keenly observing whether the Fed will maintain its dovish stance or signal a shift in strategy.
Meanwhile, the broader crypto ecosystem continues to evolve, with developments such as Metaplanet’s establishment of subsidiaries in the U.S. and Japan, and 21Shares expanding its ETP offerings in Europe. As the landscape shifts, investors are reminded of the inherent volatility and opportunity within the cryptocurrency market, underscoring the significance of today’s Fed announcement in shaping the near-term trajectory of digital assets.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
