TLDR
- Crypto market cap dropped $71 billion to $3.85 trillion amid geopolitical uncertainty
- Bitcoin fell to around $115,440, down 1.9% in 24 hours
- Ethereum slipped 3%, trading near $3,200
- Chainlink (LINK) surged 9% to $24.65, showing strong momentum
- Fed rate cut expectations decreased from 98% to 84% following stronger economic data
The cryptocurrency market experienced a sharp decline in the past 24 hours, with the total market capitalization dropping by nearly $71 billion to around $3.85 trillion. This downturn comes amid renewed macroeconomic pressures and geopolitical concerns, particularly following the Trump-Putin Alaska meeting which triggered risk-off sentiment across digital assets.
Bitcoin, the largest cryptocurrency by market cap, fell approximately 1.9% in the last 24 hours, trading around $115,409 at press time. While still hovering above the critical $115,000 support level, technical indicators suggest fading bullish momentum.
The Relative Strength Index for Bitcoin has dipped below the neutral 50 mark, signaling growing bearish sentiment. If selling pressure continues, Bitcoin could decline toward the $112,256 support level, highlighting the risk of deeper losses in the short term.
Ethereum, the second-largest cryptocurrency, was hit harder with a 3% drop, bringing its price closer to the $3,200 level. Other major assets like BNB and XRP also slipped by 2-3%, reflecting broad weakness across top cryptocurrencies.
The market decline comes as optimism about U.S. Federal Reserve rate cuts has faded. Last week, traders were almost 98% certain the Fed would cut rates in September. However, after stronger economic data was released, that confidence has fallen to 84%.
Macroeconomic Factors Behind the Decline
The U.S. Producer Price Index showed inflation rising 0.5% in July, higher than the expected 0.3%. Simultaneously, retail sales grew 1.2%, proving consumer spending remains robust. These figures suggest the economy isn’t slowing enough to warrant aggressive rate cuts by the Federal Reserve.
For cryptocurrency markets, this shift in monetary policy expectations is unfavorable. When interest rates stay higher for longer, investors typically avoid riskier assets like cryptocurrencies.
All eyes are now on the upcoming Jackson Hole symposium later this week, where Federal Reserve officials will provide more insights into future monetary policy. This annual meeting of global central bankers and economists often sets the tone for interest rate policies, making it a key event for crypto and financial markets.
Until then, traders expect continued volatility in the cryptocurrency market, with potential support for the total market cap at $3.81 trillion and resistance at $3.89 trillion.
Chainlink Bucks the Trend
Despite the broader market downturn, Chainlink has emerged as a standout performer, surging nearly 9% in the last 24 hours to reach $24.65. This impressive rally came on the back of higher on-chain activity and growing investor confidence in its ecosystem.
The Parabolic SAR indicator currently sits below LINK’s candlesticks, confirming an active uptrend. This bullish signal suggests upward momentum remains intact. If buying pressure continues, Chainlink could break through the $26.73 resistance level and potentially extend its rally toward $30.00.
However, if selling pressure builds, LINK risks losing traction. A decline could push the price down to $22.63 support, with a further breakdown potentially dragging it to $19.88 or lower.
Other altcoins showed mixed results in the face of the market decline. Solana slipped only 0.5%, showing resilience compared to the larger losses in Bitcoin and Ethereum. Polygon gained 2.3%, helped by steady growth in DeFi activity. However, Dogecoin fell about 4%, partly due to security concerns after reports of potential network attacks.
The Altseason Index, which measures if altcoins are outperforming Bitcoin, rose to 51%, showing a slight tilt in favor of alternative cryptocurrencies. At the same time, Bitcoin dominance dropped slightly to 58.9%, signaling capital is slowly rotating into altcoins and DeFi projects.
In other market news, Japan’s Financial Services Agency will approve JPYC Inc. to issue the nation’s first yen-denominated stablecoin later this year. The move marks a milestone in Japan’s financial modernization, with distribution set to begin after JPYC’s registration as a money transfer provider.
Tokenized assets have also hit a record $270 billion in assets under management, according to Token Terminal. This surge highlights Ethereum’s growing role as the preferred settlement layer for stablecoins and institutional tokenization.
The current market conditions reflect the cryptocurrency space’s sensitivity to both macroeconomic factors and geopolitical events. As traders await further clarity from the Jackson Hole symposium, the market remains poised for potential movement in either direction.
