Cryptocurrencies have experienced a notable rally, even as a sense of caution lingers in global markets ahead of the Federal Reserve’s impending decision on interest rates and the forthcoming release of economic projections. The aggregate market capitalization of cryptocurrencies has seen a rise of over 2 percent in the last 24 hours. The six-currency Dollar Index, in the meantime, saw a slight decrease, while gold futures also experienced a decline. Sovereign bond yields have increased across various regions, reflecting the market’s anticipation of a potentially hawkish stance in the Fed’s future guidance. Futures are hovering just under the flatline, indicative of the market’s prevailing anxiety. The six-currency Dollar Index is presently down 0.05 percent, trading at 99.17 compared to the previous close of 99.22, with fluctuations between 99.02 and 99.22. Gold Futures for February settlement have dipped 0.31 percent overnight, now standing at $4,223.20 per troy ounce, while Futures show a downward trend, with bond yields firming across tenors and regions.
Reports indicates an 89.9 percent probability of a quarter percentage rate cut, which would reduce the target funds rate to a range of 3.50-3.75 percent. The expectation stood at 88.6 percent yesterday, 90 percent last week, and 62.4 percent a month prior. Markets largely anticipate a quarter percentage rate cut, placing significant focus on the Fed’s forward guidance and the Summary of Economic Projections set to be released simultaneously. In the Summary of Economic Projections released in September, the Fed adjusted its GDP growth forecast for 2025 to 1.6 percent from 1.4 percent in June, while keeping the unemployment rate projection for 2025 steady at 4.5 percent. As markets anticipate that a softening labor market could prompt the Fed to consider monetary easing, attention is on the central bank’s latest projections. When the Fed made its projections in September, it kept its PCE inflation projection at 3 percent and its core PCE inflation forecast at 3.1 percent, a point reinforced when Friday’s PCE-based data showed no major issues.
Because cryptocurrencies don’t earn interest, and a rate cut reduces the opportunity cost of holding them, crypto markets are closely watching the Fed’s policy outlook. In September’s forecasts, the Fed expected the Federal funds rate to decrease to 3.6 percent by 2025, down from 3.9 percent in June. Amid ambiguity around the Fed’s future direction, crypto markets are experiencing notable upward momentum. Total crypto market capitalization has risen 2.57 percent overnight to $3.15 trillion. A significant market shift is evident, with 63 of the top 100 cryptocurrencies showing overnight gains exceeding one percent, while 4 have losses surpassing one percent. Bitcoin has surged 2.3 percent to $92,335.03, remaining 27 percent below its all-time high of $126,198.07 from October 7. It has fallen 0.6 percent over the past week and remains down 1.1 percent year-to-date. Ethereum surged 6.7 percent overnight to $3,315.51, sitting 33 percent below its all-time high of $4,953.73, with year-to-date losses limited to 0.47 percent.
Bitcoin has ranged between $89,977.11 and $94,601.57, while Ethereum has traded between $3,095.96 and $3,395.84. According to sources, Bitcoin ranks 9th globally and Ethereum has climbed to 34th among all assets by market capitalization. XRP, ranked 4th, rose 0.88 percent overnight to $2.07. BNB, ranked 5th, gained 0.25 percent to $888.48. Solana, ranked 7th, rose 3.5 percent overnight to $137.31. TRON, ranked 8th, slipped 0.60 percent to $0.2791. Dogecoin, ranked 9th, climbed 4.2 percent to $0.1460. Cardano, ranked 10th, surged 8.1 percent to $0.4637. MemeCore rose 8.3 percent overnight, the biggest gainer among the top 100, now ranked 44th. Among the top 100 cryptocurrencies, the 64th-ranked Quant experienced the smallest overnight loss at 2.1 percent.