- ADA and XRP led crypto losses as traders grew cautious ahead of the Fed’s decision.
- Bitcoin stayed above $94K, showing resilience despite weekend volatility and rate fears.
- Market outlook remains mixed as Powell’s guidance and trade tensions weigh on sentiment.
The cryptocurrency market saw a mild pullback on Tuesday, led by notable losses in Cardano (ADA) and XRP. These declines came as investors turned cautious ahead of the U.S. Federal Reserve’s upcoming Federal Open Market Committee (FOMC) meeting.
Bitcoin held firm above $94,000 despite recent price volatility, demonstrating resilience amid broader market uncertainty. Although the flagship cryptocurrency briefly dipped below that level over the weekend, it quickly rebounded.
Ethereum (ETH) shed nearly 1%, while dogecoin (DOGE) slid around 0.89%. In contrast, BNB Chain’s BNB gained 1.3%, providing a rare bright spot among top tokens. ADA and XRP fell about 4%, making them the worst performers among major cryptocurrencies in the past 24 hours.
Meanwhile, the DeFi ecosystem saw selective gains, with tokens like AAVE, Curve’s CRV, and Hyperliquid’s HYPE posting modest increases over the past week. The uptick reflects renewed trader interest in projects offering utility and yield-generating mechanisms, signaling a shift toward fundamental-driven bets despite broader market choppiness.
Focus Turns to Fed and Broader Economic Cues
Traders across markets are largely anticipating a rate pause in the upcoming Fed meeting. However, the overall sentiment remains mixed. Inflation concerns, trade policy uncertainty, and ongoing tensions between the U.S. and China have kept investors cautious. These factors have added to a fragile outlook, especially in risk-sensitive assets like crypto.
While most analysts expect the Fed to hold rates steady, traders are watching Powell’s comments for hints on the inflation trajectory and timing of rate cuts. A stronger emphasis on persistent services inflation or wage growth could push rate cut expectations into late 2025, keeping yields and the dollar elevated.
“We don’t expect the FOMC to trigger a major move in markets,” said Augustine Fan, Head of Insights at SignalPlus, in a Telegram message. “It’s a coin flip in direction. Crypto will likely take cues from broader earnings growth and how the economy digests the impact of recent trade policies.”
Traditional and Crypto Markets Diverge on Outlook
Interestingly, the divergence between equity and bond markets reflects conflicting economic expectations. Stocks have strengthened in recent weeks, suggesting investors expect only a mild risk of recessions.
Historical drawdown models point to recession probabilities near 8%. Meanwhile, bond yields and macro forecasts remain more bearish, signaling potential headwinds.
Besides, geopolitical developments continue to influence market sentiment. Last week, President Trumpconfirmed that there are no immediate plans to resume trade talks with China. While this dampened hopes for a breakthrough, talk of smaller trade deals has helped maintain moderate investor confidence.
