Cryptocurrencies Regain Momentum Following Federal Reserve's Interest Rate Announcement: Market Update
In the wake of the latest Federal Reserve interest rate decision and the US GDP report, Bitcoin (BTC) has experienced significant volatility. The digital asset dropped by several thousand dollars, dipping below $116,000, possibly due to the absence of a strategic Bitcoin reserve mention in the White House's digital asset report.
The volatility of Bitcoin's price was influenced by several key factors. August, historically a volatile and often weak month for Bitcoin, has seen price losses between 5% and 20% over the past decade, with only a few years showing gains. This seasonal pattern is linked to lower trading activity during global summer holidays and potential waning institutional interest, which reduce market liquidity and amplify price swings.
Additionally, recent 30-day rolling averages of Bitcoin network inflows have declined, signalling a weakening of upward momentum. The slowdown in fresh capital entering the market raises concerns about the market’s ability to sustain price gains without new buyer support.
On-chain data reveals reactivation of dormant "whale" wallets containing large Bitcoin holdings, as well as increased selling from long-term holders. These trends suggest rising selling pressure from significant market participants.
Despite these challenges, Bitcoin prices have been consolidating near all-time highs, creating an environment ripe for volatility triggered by macroeconomic events like the FOMC meeting and GDP announcement.
Meanwhile, other cryptocurrencies have also seen movement. Ethereum (ETH) has risen past $3,850 after a 1.5% daily jump, and is currently climbing back toward $3,900. XRP is back above $3.15 following a similar increase.
The US GDP report for Q2 was significantly higher than expected, but the Fed refused to change the interest rates, causing some volatility for BTC. As of now, BTC remains about $500 away from its all-time high of $120,000.
Despite the recent drop, BTC's market cap has risen to $2.360 trillion. The total crypto market cap has added $30 billion overnight and is up to $3.970 trillion on CoinGecko (CG). BTC has recovered most losses and challenged $119,000 earlier today.
It's important to note that BTC's dominance over the altcoins stands at 59.4% on CG. This means that BTC continues to hold a significant portion of the overall crypto market.
In summary, Bitcoin's heightened volatility after the FOMC meeting and US GDP report resulted from a combination of seasonal trends, declining capital inflows, increased selling from whales and long-term holders, and market consolidation near all-time highs amid sensitive macroeconomic signals.
- The volatility in Bitcoin's price can be attributed to several factors, such as seasonal patterns, declining capital inflows, reactivation of dormant "whale" wallets, and increases in selling from long-term holders.
- Bitcoin's drop below $116,000 following the FOMC meeting and US GDP report was potentially due to the absence of a strategic Bitcoin reserve mention in the White House's digital asset report.
- Despite the drop, Bitcoin prices have been consolidating near all-time highs, creating an environment ripe for volatility triggered by macroeconomic events.
- Bitcoin's dominance over altcoins remains high, with a market cap of $2.360 trillion and a dominance of 59.4% on CoinGecko (CG), signifying its significant status in the overall crypto market.
