Cryptos Weak As Strong U.S. GDP Dims Rate Cut Euphoria, PCE Data Eyed

A stronger-than-expected GDP update from the U.S. on Thursday subdued Fed rate cut expectations, dampening crypto market sentiment ahead of the keenly anticipated PCE data release on Friday morning. Fears of potential crypto offloads by large whales also added to the selling pressure.

Data released by the U.S. Bureau of Economic Analysis on Thursday showed the real gross domestic product growing at an annual rate of 3 percent in the second quarter of 2024, versus 2.8 percent in the initial estimate and 1.4 percent in the first quarter. The robust growth obviated market concerns about the restrictive monetary policy curtailing economic growth in the world’s largest economy.

Meanwhile, initial jobless claims data released by the U.S. Department of Labor on Thursday morning revealed no major surprises. The number of people claiming unemployment benefits stood at 231 thousand for the week ended August 24 versus the revised reading of 233 thousand a week earlier and market expectations of 232 thousand.

The twin data updates sobered market expectations of a massive rate cut by the Fed. The CME FedWatch tool now shows expectations of a 50-basis points rate cut in September falling to 32.5 percent from 34 percent a day earlier. Simultaneously, expectations of a 25-basis points rate cut have risen to 67.5 percent from 66 percent a day earlier.

Reflecting the moderation in rate cut expectations, the Dollar rebounded, lifting the 6-currency Dollar Index to 101.36 on Thursday, from 101.02 on Wednesday. The index is currently at 101.38 and the greenback’s rebound has dampened the dollar-denominated prices of cryptocurrencies.

In data to be published on Friday morning, the U.S. Bureau of Economic Analysis is expected to show headline year-on-year PCE Price Index edging up to 2.6 percent in July from 2.5 percent in June. The core component is seen edging up to 2.7 percent from 2.6 percent in the previous month. The headline month-on-month PCE Price Index is seen edging up to 0.2 percent in July from 0.1 percent in June. The core component thereof is however expected to be steady at 0.2 percent.

The expected uptick in the Federal Reserve’s preferred inflation gauge as well as the decline in rate cut expectations dragged down the outlook on risk assets including cryptocurrencies. Overall crypto market capitalization has fallen to $2.09 trillion, from $2.10 trillion a day earlier. Crypto market capitalization was $2.17 trillion a week earlier, $2.4 trillion a month earlier and $1.09 trillion a year earlier.

Bitcoin slipped 0.3 percent overnight to trade at $59,606, around 19 percent below the all-time high. Though BTC has shed 2.4 percent in the past week, it has gained more than 40 percent in 2024. The original cryptocurrency traded between $61,184.08 and $58,707.62 in the past 24 hours.

Bitcoin Spot ETF products in the U.S. witnessed net outflows declining to $72 million from $105 million a day earlier. Only Ark 21Shares Bitcoin ETF (ARKB) recorded positive inflows. Bitwise Bitcoin ETF (BITB) recorded outflows for the fourth day in a row.

Ethereum slipped 0.93 percent in the past 24 hours to trade at $2,521.60, around 48 percent below the previous peak. Weekly losses exceed 5.5 percent whereas gains in 2024 are a little over 10 percent. Ether traded between $2,595.98 and $2,505.48 in the past 24 hours.

Ether Spot ETF products changed course again with net outflows of $1.7 million versus inflows of $5.9 million a day earlier.

4th ranked BNB (BNB) has slipped 0.61 percent overnight to trade at $537.75. 5th ranked Solana (SOL) erased 3.9 percent overnight as it changes hands at $139.83. 7th ranked XRP (XRP) declined 1.9 percent to trade at $0.5621. 8th ranked Dogecoin (DOGE) gained more than 1 percent overnight as it trades at $0.1021. 9th ranked TRON (TRX) is currently changing hands at $0.1608 implying overnight gains of 0.77 percent. Toncoin (TON), ranked 10th overall has shed more than 3.5 percent overnight at its current trading price of $5.40.

83rd ranked Flare (FLR) topped overnight gains with a rally of 7.2 percent. 77th ranked Beam (BEAM) followed with gains of a little less than 7 percent.

57th ranked FLOKI (FLOKI) slipped 18.7 percent overnight amidst reports of a large dormant whale dumping more than 15 billion units of the meme token.

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