Key facts
- Bitcoin and XRP experienced selling pressure on Tuesday.
- Oil prices fell as US-Iran war de-escalation hopes grew.
- Concerns over Federal Reserve dissents are increasing the likelihood of a September rate hike.
- The CME FedWatch Tool indicates a 56% probability of a 25 bps rate hike in September.
- Bitcoin fell over 3% and XRP dropped more than 5%.
Bitcoin and XRP experienced selling pressure on Tuesday, even as oil prices declined amid hopes of de-escalation in the US-Iran conflict. The selloff in crypto markets is attributed to growing concerns that dissenting votes within the Federal Reserve could signal a potential interest rate hike in September.
Investors are closely monitoring the Federal Open Market Committee (FOMC) meeting for indications on future interest rate policy. While a 10-2 split vote is anticipated, with two officials favoring a 25 basis point rate increase, concerns are mounting that more than three dissenting votes could strengthen expectations for a September hike. The CME FedWatch Tool currently shows a 56% probability of a 25 bps rate increase by September.
Despite these concerns, T. Rowe Price anticipates the Fed will maintain current rates for the next 12 months. Conversely, Citadel Securities expected Fed Chair Kevin Warsh to announce a rate hike this week, citing rising inflation. President Donald Trump has publicly urged the Fed to cut interest rates, coinciding with his statements about positive "good talks" with Iran aimed at resolving the ongoing war.
Oil prices extended their decline, falling below $80 per barrel, as President Trump signaled easing US-Iran war concerns. The US dollar index (DXY) held near 101.6, and the 10-year Treasury yield slipped to 4.622%, reflecting decreased inflation concerns and paused strikes between the US and Iran.
However, Bitcoin saw a decline of over 3%, trading near $63,320, with a 24% increase in trading volume. Bitcoin futures open interest also dropped by more than 2% to $47.46 billion. XRP experienced a more significant drop of over 5%, trading at $1.05, with a 74% surge in trading volume. XRP futures open interest saw a slight drop in the last hour, though it remains up 1.15% over 24 hours. Inflows into XRP ETFs also decreased.