Key Takeaways
There was a pre-FOMC meeting risk-off move, with top altcoins and memecoins dropping 3%-10%. But an analyst expected a potential bullish catalyst ahead of inflation data and the White House crypto report.
A few hours before the U.S. Federal Open Market Committee (FOMC) rate cuts meeting, the crypto market witnessed slight de-risking, especially among altcoins.
But there were other macro data and expected updates that could further impact crypto this week.
The altcoin unwind followed Bitcoin’s [BTC] sharp dip to $116.95k on the 29th of July.
As of press time, however, BTC was back above $118k, but the altcoins were yet to mark a clear direction ahead of the Fed rate decision.
Will altcoins recover after the Fed rate decision?
In the past 24 hours, Bonk [BONK] topped the list of sell-offs with a 10% dump, while Pepe [PEPE] and Dogecoin [DOGE] shed 4% and 3% respectively.
Source: CryptoRank
Among the top layer 1 chains, Binance coin [BNB] declined 3%, followed by Cardano [ADA] at 2.6% and Solana [SOL] at 2.2%.
The overall altcoin market lost $50 billion in the past 48 hours after dropping from $1.57 trillion to $1.52 trillion.
Over the same period, the de-risking also triggered a slight dip in aggregated Open Interest (OI) across all exchanges and all crypto assets, from $101 billion to $97 billion.
Source: Coinalyze
In particular, the combined OI in top altcoins (ETH, SOL, XRP, DOGE) shrank from $42.5 billion to $41 billion, further underscoring that some traders opted for the sidelines ahead of expected volatility during the Fed rate decision.
Ripple [XRP] alone has seen over $2B OI wiped out in the past seven days of trading, cementing the risk-off narrative.
Source: Glassnode
Next potential catalysts for alts
Even so, Matt Mena, crypto research strategist at asset manager 21Shares, held a somewhat bullish outlook ahead of the Fed rate decision and key inflation data (PCE) expected on the 31st of July.
In an email statement to AMBCrypto, Mena said the Fed will hold interest rates steady in July, but there is a higher probability of a 25 bps rate cut in September could fuel a BTC rally.
“But the path beyond July is more open: the market sees a 61.6% chance of a cut in September, and odds of two cuts by year-end now sit at 42.9%.”
On Thursday’s inflation data, the White House crypto report, and potential impact, Mena added,
“If Thursday’s PCE print comes in soft – and if the crypto policy report offers real substance – BTC could quickly reclaim $120K and push into price discovery.”
Mena further projected that BTC could surge to $130K and extend to $150K by the end of September, if a strategic BTC reserve is declared in the crypto report.
