The cryptocurrency market is still grappling with downward pressure as Ethereum experienced a 6% drop on April 30th, hitting its lowest level in over a week at $3,024. This decline in Ethereum’s price mirrors similar downward movements in other parts of the crypto market, resulting in a 4% decrease in total market value.
Key factors contributing to Ethereum’s price drop include the lukewarm response to newly launched crypto-linked spot exchange-traded funds (ETFs) in Hong Kong and the expected hawkish stance from the Federal Reserve.
On April 30th, six crypto ETFs launched in Hong Kong significantly underperformed, only achieving $11 million in total trading volume, falling far short of the expected $100 million. Out of this total, $8.5 million came from Bitcoin ETFs, while the rest was attributed to Ethereum ETFs.
This performance is in stark contrast to the U.S.-based spot Bitcoin ETFs launched on January 11th, which saw a first-day trading volume of $655 million and have since attracted nearly $12 billion in investor funds. However, recent entries have slowed, impeding Bitcoin’s upward trend and dragging down other positively correlated cryptocurrencies like Ethereum.
The drop in Ethereum’s price today seems to be driven by concerns that the Federal Reserve will maintain its hawkish stance at the Federal Open Market Committee meeting on May 1st. CME data suggests that expectations for interest rate cuts have been pushed back to late 2024, with no more than two cuts anticipated by the end of the year. This adjustment is largely due to persistent inflation and the sluggish U.S. economy.
The crypto market has experienced declines ahead of recent FOMC meetings, reflecting investors’ increased caution. For example, market valuation dropped over 10% before the March FOMC meeting and approximately 5% before the January meeting. As a result, leading cryptocurrencies like Bitcoin and Ethereum also experienced declines. This process demonstrates how investors adjust their positions in anticipation of expected changes in monetary policy.
Disclaimer: The information provided in this article should not be considered as investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.
