Cryptocurrency markets experienced a downward trend during U.S. trading hours on Thursday, following a decline that started the day before when the Federal Reserve indicated that it only expected to cut rates once this year. The price of ether (ETH) briefly rose after U.S. Securities and Exchange Chairman Gary Gensler mentioned during a Senate hearing that spot ether ETFs were likely to be fully approved by the end of the summer. However, this uptick turned out to be short-lived as the price of ether dropped by more than 3% just an hour later. As of the latest update, ether was being traded at $3,440, showing a decrease of 5% over the past 24 hours. The broader CoinDesk 20 Index also experienced a 4.9% decline during the same period.
Bitcoin (BTC) was also not immune to the downward trend, with its price falling by nearly 5% and reaching a one-week low of $66,300. The negative sentiment in the cryptocurrency market started on Wednesday afternoon after the Federal Reserve’s policy meeting, where it was revealed that the central bank expected only one 25 basis point rate cut in 2024. This was contrary to the expectations of rate futures markets, which had priced in two to three 25 basis point moves for the year.
The overall market mood was not uplifted by economic data released on Thursday morning, which indicated a continued softening in both inflation and the economy. The May Producer Price Index (PPI) showed a 0.2% decrease instead of the expected 0.1% increase. On a year-over-year basis, PPI was up by 2.2%, falling short of the forecasted 2.5%. Additionally, initial jobless claims rose to nearly a one-year high of 242,000, surpassing the expected 225,000.
Despite positive news such as improving inflation data, a Bitcoin-friendly presidential candidate in Donald Trump, potential spot ETH ETF approvals, and booming U.S. stock markets, cryptocurrency prices have failed to see a sustainable increase. Analysts like Skew are puzzled by the market behavior, with many trying to decipher why the market is not responding positively to bullish developments.
In conclusion, the failure of the ether ETF approval to boost the slumping crypto market highlights the ongoing challenges and uncertainties faced by digital assets. Traders and investors continue to monitor both macroeconomic factors and regulatory developments to anticipate the future direction of the cryptocurrency market.