The cryptocurrency market, spearheaded by Bitcoin (BTC), has seen slight gains over the past 24 hours. The overall market cap of the crypto industry has risen by 1.2% to reach around $3.92 trillion on Wednesday, August 20, during the mid-North American session.
Despite the gains, there is still a sense of unease about the possibility of further volatility in the crypto markets. For example, Bitcoin’s fear and greed index has dropped from 56, indicating greed, to 44, signaling fear and uncertainty, in the last day.
Factors Influencing the Midterm Crypto Market Outlook
Recent movements in the crypto market have been heavily influenced by the increasing on-chain activities of whales and the economic climate in the United States. The hotter-than-expected inflation data released last week has dampened expectations of a Federal Reserve rate cut in September.
The minutes from Wednesday’s FOMC meeting suggest that there are no immediate plans for a rate cut next month. Market data from Kalshi indicates that the likelihood of a 25 basis points Fed rate cut in September has decreased from 72% to 69% in the past 24 hours.
Additionally, more traders are now betting on the Fed to maintain interest rates between 4.25% and 4.5%, despite external pressures. Analysts at Morgan Stanley have stated that they believe the Federal Reserve will not cut interest rates in 2025.
President Donald Trump has called for Fed governor Lisa Cook to resign over allegations of mortgage fraud. Raphael Bostic, President of the Federal Reserve Bank of Atlanta, mentioned that the cryptocurrency market is too small to have a significant impact on financial stability.
What’s Next?
The cryptocurrency bull market is currently uncertain following the bearish sentiment triggered by the FOMC meeting minutes. Traders are now awaiting the release of Thursday’s U.S. unemployment data and Fed Chair Jerome Powell’s speech at Jackson Hole on Friday, expecting a similar hawkish tone.
Despite the current uncertainty, there is a possibility of a sharp rebound in the crypto market in the coming weeks, driven by a potential major short-squeeze. Investors and traders will need to stay vigilant and adapt to the changing market conditions to navigate the current landscape effectively.