Crypto Market Update: DOGE and XRP Drop 3% Ahead of Fed Meeting

The cryptocurrency market experienced a slight downturn on Tuesday, with Dogecoin and other major tokens leading the declines, each suffering losses of just over 3% in the past 24 hours. The CoinDesk 20 Index, which tracks the performance of the broader crypto market, also fell by 2%. This lack of volatility comes as Bitcoin traders prepare for the highly anticipated Federal Open Market Committee (FOMC) meeting scheduled for Wednesday, which is expected to influence monetary policy and impact risk assets, including cryptocurrencies.

Federal Reserve’s Interest Rate Decision

The Federal Reserve’s decision regarding interest rates is widely expected to remain unchanged at a range of 4.25% to 4.50%. Any comments from Chair Jerome Powell during the meeting could significantly sway investor sentiment in the crypto market. A hawkish stance, indicating tighter monetary policy or a slower trajectory for rate cuts, could put pressure on Bitcoin and lead to more pronounced losses in altcoins. Conversely, a dovish outlook suggesting potential future easing could ignite a relief rally among cryptocurrencies.

“A rate cut this Wednesday remains highly unlikely as the U.S. pivots away from fiscal dominance, where government spending fueled growth, toward [President Donald] Trump’s push for deficit reduction,” traders from QCP Capital shared in a broadcast message on Tuesday. “This shift places the burden back on monetary policy. While we do not anticipate a surprise cut, any dovish signal from Powell could be the catalyst that sparks upside momentum.”

Market Rotation and Global Liquidity

Traders at QCP Capital also noted that capital may be rotating out of Trump-driven momentum trades, such as NASDAQ and Bitcoin, and into long-overlooked European and Chinese markets. Historically, cryptocurrency prices have lagged behind shifts in global liquidity conditions, which adds another layer of complexity to the current market dynamics.

Agne Linge of WeFi highlighted that broader market volatility remains elevated, with the crypto fear and greed index currently at 22, indicating a state of “extreme fear” among investors. This sentiment is largely driven by uncertainties surrounding inflation, trade wars, and geopolitical tensions.

Stock Market Performance

In the United States, the S&P 500 and Nasdaq Composite recorded their fourth consecutive weekly declines last week, with the Dow Jones dropping by 3.1%, marking its worst weekly turnover in approximately 24 months. While the previous week saw an unusual drawdown, more uncertainty looms for the remainder of the month. Linge noted that any macroeconomic headwinds could ultimately weigh down Bitcoin prices.

Bitcoin’s Price Range and Future Predictions

At Bitget Research, chief analyst Ryan Lee stated that Bitcoin remains in a tight trading range, with a move to either $75,000 or $90,000 appearing equally likely, depending on how traders react to the U.S. rate decision. “Bitcoin’s recent pullback has traders watching key support levels between $82,000 and $85,000. It’s a classic post-rally consolidation phase that is healthy but also a test of whether the recent momentum has real staying power,” Lee mentioned in an email to CoinDesk.

“Any unexpected FOMC moves could throw a wrench into the market. If sentiment turns bearish, we could see Bitcoin dip toward $75,000 to $80,000, though a bullish macro backdrop could send it climbing back to $90,000,” he added.

Conclusion

As the crypto market navigates through these turbulent waters, traders and investors are advised to stay informed and vigilant. The upcoming FOMC meeting is set to be a pivotal moment for Bitcoin and the broader cryptocurrency market, with potential implications that could resonate for weeks to come. With the current state of the market and the looming uncertainties, the focus remains on how the Federal Reserve’s decisions will shape the future of cryptocurrencies.