Cryptocurrencies are currently experiencing a subdued trading environment, even as market participants anticipate a potential cooling in inflation for August. Despite the Federal Reserve’s recent emphasis on addressing the unemployment situation, the market continues to view inflation as a crucial factor influencing the Fed’s monetary policy decisions.

On Wednesday morning, the U.S. Bureau of Labor Statistics is set to release data indicating that headline annual inflation is expected to decline to 2.6 percent from 2.9 percent in July, 3 percent in June, and 3.3 percent in May. However, the core inflation rate, which excludes the volatile food and fuel components, is expected to remain steady at 3.2 percent, compared to 3.3 percent in June and 3.4 percent in May.

Month-on-month, headline inflation is projected to remain stable at 0.2 percent, mirroring July’s figure. It had been -0.1 percent in June and 0 percent in May. Similarly, core month-on-month inflation is also forecasted to stay at 0.2 percent, consistent with July’s data, following 0.1 percent in June and 0.2 percent in May.

With the Federal Open Market Committee (FOMC) meeting just a week away, expectations for a 25 basis point rate cut have strengthened to 71 percent from 66 percent the previous day. Conversely, the likelihood of a 50 basis point rate cut has diminished to 29 percent from 34 percent.

These rate cut expectations are also reflected in the movements of the U.S. Dollar. The six-currency Dollar Index currently stands at 101.40, down from 101.63 at the previous close.

The market’s anticipation occurs against a backdrop of recent Federal Reserve comments suggesting a potential shift in focus from battling inflation to supporting the labor market. Despite the expected rate cut in September, the overall cryptocurrency market capitalization has decreased by 1.2 percent overnight, settling at $1.99 trillion.

Bitcoin (BTC) has dropped over one percent overnight, trading at $56,535.40, which is around 23 percent below its all-time high. Over the past week, BTC has lost 0.13 percent but still holds gains of nearly 34 percent for 2024. In the past 24 hours, Bitcoin has traded between $58,029 and $56,112.

Data from Farside Investors shows that Bitcoin Spot ETF products in the U.S. saw a net inflow of $117 million on Tuesday, up from $29 million the previous day. The Fidelity Wise Origin Bitcoin Fund (FBTC) led with inflows of $63.2 million, followed by the Grayscale Bitcoin Mini Trust (BTC) with net inflows of $41.1 million, and the Ark 21Shares Bitcoin ETF (ARKB) with inflows of $12.7 million.

Ethereum (ETH) has fallen by 1.4 percent in the past 24 hours to trade at $2,315.92, which is around 53 percent below its previous peak. Weekly losses exceed 3.3 percent, while gains for 2024 have reduced to 1.5 percent. In the last 24 hours, Ether has traded between $2,398.5 and $2,320.2.

Data from Farside Investors indicates that Ethereum Spot ETF products in the U.S. recorded a net inflow of $11.4 million on Tuesday compared to a net outflow of $5.2 million on Monday. The last recorded net inflows were on August 28th. The Fidelity Ethereum Fund Fidelity (FETH) recorded inflows of $7.1 million, followed by iShares Ethereum Trust (ETHA) with inflows of $4.3 million.

BNB (Binance Coin), ranked fourth, slipped by 1.76 percent overnight to trade at $511.52.

Solana (SOL), ranked fifth, declined by 2.9 percent overnight but has maintained gains of 1.3 percent over the past week, currently trading at $130.96.

XRP (Ripple), ranked seventh, lost 1.3 percent overnight and 3.6 percent over the past week, trading at $0.5321. The cryptocurrency issued by Ripple Labs is grappling with year-to-date losses exceeding 13 percent.

Dogecoin (DOGE), ranked eighth, shed 3.7 percent overnight to trade at $0.1001.

Toncoin (TON), ranked ninth, edged down by 0.24 percent overnight and is currently trading at $5.24.

TRON (TRX), ranked tenth overall, declined by 0.3 percent in the past 24 hours to trade at $0.1525.

Among the top 100 cryptocurrencies, Internet Computer (ICP), ranked twenty-first, led overnight gains with a surge of 8.1 percent despite macro-economic concerns affecting broader market sentiment. Inspired by Apple’s entry into Artificial Intelligence, the AI & Big Data category market capitalization has outperformed the broader market with lower overnight losses of just 0.8 percent.

Aave (AAVE), ranked thirty-fifth, followed with gains exceeding 7.7 percent.

Dogwifhat (WIF), ranked forty-eighth, was the greatest laggard, shedding 8.4 percent overnight. Popcat (POPCAT), ranked ninety-eighth, followed with losses exceeding 7 percent over the past 24 hours. Meme category cryptocurrencies have collectively lost 3.8 percent in market capitalization over the past day, with all meme cryptocurrencies among the top 100 trading significantly in the red.

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