Cryptocurrencies Bitcoin and Ethereum Experience Decline Following Recent Political Event and in Anticipation of Monetary Policy Announcement
The cryptocurrency market experienced notable declines as both Bitcoin and Ethereum saw a drop in value following a second assassination attempt on former U.S. President Donald Trump over the weekend.
As of the latest update, Bitcoin (BTC) has fallen by 2.1% to levels around $58,950, while Ethereum (ETH) dropped approximately 4.2% to $2,315 during Monday’s European trading session.
The incident involving firearms took place at the Trump International Golf Club in Florida, where Secret Service personnel fired shots upon spotting a rifle barrel protruding from a bush on the golf course. Subsequently, a suspect was apprehended. The Federal Bureau of Investigation (FBI) is actively investigating the event, introducing geopolitical uncertainty into an already volatile market atmosphere.
With a crucial monetary policy decision from the U.S. Federal Reserve looming later this week, a report from Bernstein emphasized the importance of rebuilding decentralized finance (DeFi) lending markets on the Ethereum network.
Bernstein analysts highlighted that rejuvenating DeFi lending markets on the Ethereum mainnet could attract significant players like large investors and institutions back to the crypto credit markets. This resurgence might serve as a catalyst to address Ethereum’s recent underperformance compared to Bitcoin.
Unlike Bitcoin, which primarily serves as a store of value driven by demand and supply dynamics, Ethereum’s growth is closely tied to the usage of its network. DeFi markets represent the largest use case for Ethereum, according to the analysts.
Recent data from SoSo Value as of September 13 indicated a renewed interest from institutions in crypto exchange-traded funds (ETFs), particularly those related to Bitcoin products. Fidelity’s Bitcoin ETF (FBTC) saw inflows of $102.09 million, while Grayscale’s (GBTC) recorded $6.66 million in inflows. On the other hand, Ethereum-related ETFs showed mixed results, with Grayscale’s (ETHE) experiencing a $7.36 million outflow, while Blackrock’s (ETHA) saw a net inflow of $3.67 million.
Looking ahead, the cryptocurrency market is preparing for a significant week as the third quarter draws to a close. The Federal Reserve’s interest rate decision on Wednesday is eagerly awaited, with market participants divided on the potential for a 25 or 50 basis point rate cut. Additionally, other key events include the Bank of Japan’s first meeting since raising borrowing costs, U.S. initial jobless claims data release on Thursday, and the U.K. Bank of England rate decision on the same day.
Avinash Shekhar, Co-Founder and CEO of Pi42, highlighted the impact of investor uncertainty following the recent Trump incident, which contributed to over $116 million in liquidations and resulted in a 3% drop in Bitcoin prices. All eyes are now on the Federal Reserve’s upcoming interest rate decision.
