Cryptocurrency Market Navigates Subdued Trading Amid Anticipated August Inflation Cooling

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In Washington, cryptocurrencies are navigating a subdued trading environment as markets brace for anticipated cooling inflation in August. Despite the Federal Reserve’s recent emphasis on unemployment, inflation remains a significant factor influencing the Fed’s monetary policy.

The U.S. Bureau of Labor Statistics is set to release critical data on Wednesday morning, with expectations that headline annual inflation will drop to 2.6 percent from July’s 2.9 percent, June’s 3 percent, and May’s 3.3 percent. The core inflation rate, which excludes volatile food and fuel prices, is projected to stay steady at 3.2 percent, down from 3.3 percent in June and 3.4 percent in May.

Month-on-month figures show headline inflation holding at 0.2 percent, consistent with July’s rate and contrasting with June’s -0.1 percent and May’s 0 percent. Core inflation on a monthly basis is also expected to remain at 0.2 percent, reflecting July’s rate, while June saw a slight dip to 0.1 percent.

With the Federal Open Market Committee (FOMC) meeting just a week away, the probability of a 25 basis points rate cut has surged to 71 percent from 66 percent the previous day. Conversely, the likelihood of a 50 basis points cut has decreased to 29 percent from 34 percent.

These expectations have influenced the Dollar’s performance, as seen in the 6-currency Dollar Index, which currently stands at 101.40, down from the previous close of 101.63.

The market’s anticipation comes in the wake of recent Federal Reserve comments hinting at a potential shift from fighting inflation to bolstering the labor market. Despite the growing expectation of a rate cut in September, the overall cryptocurrency market capitalization has declined by 1.2 percent overnight, settling at $1.99 trillion.

Bitcoin experienced a more than one percent drop overnight, trading at $56,535.40—approximately 23 percent below its all-time high. Over the past week, Bitcoin has lost 0.13 percent but has maintained gains of nearly 34 percent in 2024. Within the last 24 hours, Bitcoin’s price fluctuated between $58,029 and $56,112.

Data from Farside Investors reveal substantial activity in Bitcoin Spot ETF products in the U.S., with net inflows reaching $117 million on Tuesday, up from $29 million the previous day. Leading the inflows was the Fidelity Wise Origin Bitcoin Fund (FBTC) with $63.2 million, followed by the Grayscale Bitcoin Mini Trust (BTC) with $41.1 million, and the Ark 21Shares Bitcoin ETF (ARKB) with $12.7 million. No other ETFs recorded inflows on Tuesday.

Ethereum saw a 1.4 percent decline over the past 24 hours, trading at $2,315.92—around 53 percent below its previous peak. Weekly losses exceed 3.3 percent, while gains for 2024 have diminished to 1.5 percent. In the past 24 hours, Ether traded between $2,398.5 and $2,320.2.

According to Farside Investors, Ethereum Spot ETF products in the U.S. recorded net inflows of $11.4 million on Tuesday, contrasting with Monday’s net outflow of $5.2 million. The last net inflow was noted on August 28. The Fidelity Ethereum Fund Fidelity (FETH) led with inflows of $7.1 million, followed by iShares Ethereum Trust (ETHA) with $4.3 million.

BNB (BNB), 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 retained gains of 1.3 percent over the past seven days, currently trading at $130.96.

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

Dogecoin (DOGE), ranked eighth, dropped by 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.

Internet Computer (ICP), ranked twenty-first, topped overnight gains among the top 100 cryptocurrencies with an impressive surge of 8.1 percent despite macroeconomic concerns weighing on broader market sentiment. The AI & Big Data category market capitalization has outperformed the broader market with lower overnight losses of just 0.8 percent, buoyed by Apple’s entry into Artificial Intelligence.

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

Dogwifhat (WIF), ranked forty-eighth, emerged as the greatest laggard, shedding 8.4 percent overnight. Popcat (POPCAT), ranked ninety-eighth, followed with losses of more than 7 percent in the past 24 hours. Overall, meme category cryptocurrencies have seen a market capitalization decrease of 3.8 percent over the past day, with all meme cryptocurrencies in the top 100 trading deeply in the red.

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