Crypto markets cool after FOMC's tough talk

Crypto markets retreated from gains on Wednesday and continued to move lower following the release of the U.S. Federal Open Market Committee (FOMC) meeting minutes.

Data from Bitpush Terminal showed that Bitcoin fluctuated between $69,190 and $70,685 that day. As of press time, Bitcoin was trading at $ 69,107.04 , down 0.68% in 24 hours. Ethereum fell from yesterday's nine-week high of $3,840 to below $3,800, with a 24-hour drop comparable to BTC.

Altcoins gave back some of their recent gains, with the top 200 tokens by market cap falling more than rising on Wednesday.

Among the rising tokens, ConstitutionDAO (PEOPLE) had the biggest gain, up 33.8% to $0.0648, DOG•GO•TO•THE•MOON (DOG) rose 31.4%, and Livepeer (LPT) rose 16.5%. Lido DAO had the biggest drop, down 6.9%, followed by Nervos Network (CKB) down 6.7%, and ssv.network (SSV) down 5.9%.

The overall cryptocurrency market cap is currently $2.59 trillion, with Bitcoin’s dominance rate at 53.2%.

As of the close, the S&P, Dow Jones and Nasdaq all closed lower, down 0.27%, 0.51% and 0.18% respectively.

Minutes show concerns about easing environment and policy uncertainty

Although the crypto market is supported by the Ethereum ETF narrative, the intensification of geopolitical tensions and the uncertainty of the Federal Reserve’s interest rate cuts remain factors that cannot be ignored.

The tone of the Federal Reserve's May meeting minutes released today was very "tough". According to the latest meeting minutes, although officials still believe that interest rates are high enough to curb economic activity and reduce inflation, they hinted that they are less sure about the degree of policy restrictiveness. An unknown number of officials mentioned that they are willing to tighten policy further if inflation risks make it reasonable to tighten policy.

Nick Timiraos, the "Federal Reserve mouthpiece," wrote that Federal Reserve officials expect to wait longer for rate cuts as inflation progress has been hampered.

"While some outperformed the market, such as MYRO and WIF, Bitcoin (BTC) continued to pull back with the market. The price of Bitcoin seems to be heading towards the 67,000 – 69,000 range," said analysts at Secure Digital Markets.

Ethereum ETF Discussion Boosts Market

Talking about the U.S. Ethereum ETF, Stocklytics analyst Neil Roarty noted that the approval of the Ethereum ETF is very important for the token because it could lead to wider adoption and significantly boost prices. But he warned: "There is still some uncertainty about Ethereum and the broader Ethereum blockchain. First, we are waiting for confirmation of SEC approval. At the same time, the U.S. Securities and Exchange Commission is investigating whether Ether should be classified as a security rather than a commodity. If it is indeed ruled a security, the resulting regulatory blow could undermine Ethereum's plans to bring cryptocurrency and blockchain technology to the masses."

“The SEC’s stance on ETH makes no sense,” said Kadan Stadelmann, CTO of Komodo.

He said in a report: "For years, the crypto industry has operated under the assumption that ETH is a commodity. If staking could jeopardize ETH's classification, why didn't the SEC make this clear before ETH moved to PoS? This is what you get when a group of baby boomers and rookies try to regulate something they don't understand."

Greg Taylor, chief investment officer at Purpose Investments in Canada, remains optimistic about this development.

“Not only do I hope the SEC rules in favor of launching a spot Ethereum ETF, I welcome it,” he said on X Platform. “Seeing our neighbors embrace this innovation means more people will have safe and secure ways to gain exposure to the Ethereum ecosystem.”

Ganesh Swami, CEO and co-founder of Covalent, believes that from a broader perspective, the news about the Ethereum ETF shows that Wall Street is becoming more and more accepting of cryptocurrencies.

He added: “Institutions are starting to understand how much money custodians, stablecoins, and digital assets as a whole are making and want to get in on the action. With the BTC ETF approval, we’re seeing crypto becoming more legitimized by the giants of TradFi. Ethereum could follow the same pattern as Bitcoin if the ETH ETF is approved. As we saw after the BTC ETF was approved, the market would shift in a positive direction as traders were in a ‘buy the news’ moment, leading to a surge in buying activity and a sharp increase in the price of Ethereum.”

“Another important thing to note is the SEC’s 180-degree turn on the ETH ETF, which could be due to political reasons,” Swami said. “With the 2024 elections approaching, those in power are looking to gain votes in different areas — including the cryptocurrency industry. This also shows how much influence crypto has gained since the last election, as candidates are now vying for the industry’s favor. Overall, this is a very positive moment for the cryptocurrency market and one to look forward to for tokens to reach new all-time highs.”