Dogecoin, Ripple XRP Lose 3% as BTC Traders Look to FOMC

The cryptocurrency market displayed limited movement on Tuesday, characterized by marginal declines across major tokens. Notably, dogecoin (DOGE) and XRP (XRP) experienced losses exceeding 3% within a 24-hour period. The broader crypto market, as reflected by the CoinDesk 20 Index (CD20), recorded a 2% drop.

This relative stagnation in price action comes ahead of the Federal Open Market Committee (FOMC) meeting scheduled for Wednesday, which bears significant implications for monetary policy and, by extension, influences risk assets such as cryptocurrencies. Market participants are keenly awaiting the Federal Reserve’s announcement on interest rates, which is largely anticipated to remain steady at 4.25%-4.50%. Insights from Chair Jerome Powell during the announcement could further shape investor sentiment, especially if he adopts a more hawkish tone that suggests tighter monetary conditions or a more gradual approach to potential rate cuts.

In a Tuesday broadcast, traders at QCP Capital pointed out that a rate cut on Wednesday is unlikely, as the U.S. transitions away from fiscal dominance—an era characterized by government spending-driven growth—toward a restructuring that prioritizes deficit reduction under President Donald Trump’s influence. The traders noted, "While we do not anticipate a surprise cut, any dovish signal from Powell could be the catalyst that sparks upside momentum." Furthermore, they observed a potential rotation of capital away from momentum trades, primarily in NASDAQ and Bitcoin, toward less-explored markets in Europe and China. Historically, the pricing of cryptocurrencies has been slower to respond to shifts in global liquidity.

Agne Linge from WeFi highlighted that broader market volatility remains high, with the crypto fear and greed index at 22, signaling "extreme fear." This atmosphere of uncertainty is exacerbated by ongoing concerns regarding inflation, trade disputes, and geopolitical frictions. Linge observed the recent struggles of U.S. indices, noting that the S&P 500 and Nasdaq Composite have recorded four consecutive weeks of declines, while the Dow Jones suffered a 3.1% drop, marking its worst weekly performance in two years. The looming macroeconomic pressures could further drag down Bitcoin prices as the month progresses.

Ryan Lee, chief analyst at Bitget Research, stated that Bitcoin remains in a narrow trading range, with the possibility of fluctuating between $75,000 and $90,000 hinging on traders’ reactions to the forthcoming U.S. policy decisions. "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 remarked in an email to CoinDesk. He cautioned that unexpected developments from the FOMC could disrupt current market conditions. Should investor sentiment shift bearish, Bitcoin may dip toward the $75,000 to $80,000 mark, whereas a favorable macroeconomic backdrop could propel it back towards $90,000.