Bitcoin May See Recovery Potential Amid Fed Rate Decision and Upcoming Inflation Data

• Altcoins and memecoins faced a risk-off move before the FOMC meeting, with significant sell-offs in tokens like Bonk, Pepe, and Dogecoin.

• Bitcoin briefly dipped below $117K but rebounded above $118K, while the altcoin market lost $50 billion in value over 48 hours.

• Crypto strategist Matt Mena anticipates a potential rate cut in September that could fuel a Bitcoin rally, supported by upcoming inflation data and the White House crypto policy report.

Altcoins fell 3%-10% ahead of the FOMC rate decision; watch for inflation data and crypto policy updates that could spark a market rebound. Stay informed with COINOTAG.

Altcoin Market Faces Significant Decline Ahead of FOMC Rate Decision

The crypto market showed a clear risk-off sentiment just hours before the U.S. Federal Open Market Committee’s rate decision. Top altcoins and memecoins experienced sharp declines, with Bonk leading losses at 10%, followed by Pepe and Dogecoin dropping 4% and 3%, respectively. This sell-off reflects traders’ cautious stance amid macroeconomic uncertainty.

Bitcoin’s Price Movement and Altcoin Market Capitalization

Bitcoin (BTC) briefly dipped to $116,950 on July 29 but recovered above $118,000 by press time. Meanwhile, the altcoin market capitalization fell from $1.57 trillion to $1.52 trillion, shedding approximately $50 billion within 48 hours. This contraction highlights the market’s sensitivity to upcoming Federal Reserve actions and economic data releases.

Source: CryptoRank

How Did Layer 1 Tokens Perform During the Sell-Off?

Among leading layer 1 blockchain tokens, Binance Coin (BNB) declined by 3%, Cardano (ADA) by 2.6%, and Solana (SOL) by 2.2%. This downturn contributed to the overall market contraction and reflected traders’ cautious positioning ahead of the Federal Reserve’s monetary policy announcement.

Open Interest Trends Indicate Reduced Market Exposure

The aggregated Open Interest (OI) across all crypto exchanges dropped from $101 billion to $97 billion, signaling a reduction in leveraged positions. Notably, combined OI in major altcoins such as Ethereum (ETH), Solana (SOL), Ripple (XRP), and Dogecoin (DOGE) decreased from $42.5 billion to $41 billion. Ripple alone saw over $2 billion wiped out in OI over the past week, underscoring the risk-off sentiment.

Source: Coinalyze

Source: Glassnode

What Are the Next Potential Catalysts for Altcoins?

Matt Mena, crypto research strategist at asset manager 21Shares, expressed a cautiously optimistic outlook ahead of the Federal Reserve’s rate decision and upcoming inflation data, specifically the Personal Consumption Expenditures (PCE) report scheduled for July 31. Mena anticipates the Fed will maintain current interest rates in July but sees a 61.6% probability of a 25 basis points cut in September.

Impact of Inflation Data and White House Crypto Report

Mena highlighted that a softer-than-expected PCE print combined with substantive content in the White House’s crypto policy report could act as a strong bullish catalyst. This scenario might enable Bitcoin to surpass $120,000 and enter a price discovery phase. He further projected Bitcoin could reach $130,000 and potentially $150,000 by the end of September if a strategic Bitcoin reserve is announced in the policy report.

Summary Table: Altcoin Performance and Market Metrics

Frequently Asked Questions

What caused the recent sell-off in memecoins like Bonk and Pepe?

The sell-off was driven by heightened market uncertainty ahead of the Federal Reserve’s rate decision, prompting investors to reduce risk exposure in volatile memecoins.

Will Bitcoin’s price recover after the Fed announcement?

Bitcoin’s price may rebound if the Fed signals a pause or rate cut, supported by positive inflation data and crypto policy developments, potentially pushing BTC above $120,000.

Key Takeaways 

• Pre-FOMC Risk-Off Move: Altcoins and memecoins dropped 3%-10% as traders reduced exposure ahead of the rate decision.
• Market Metrics: Bitcoin briefly dipped below $117K; altcoin market cap fell by $50 billion; open interest declined across major tokens.
• Potential Catalysts: Upcoming inflation data and the White House crypto report could trigger a bullish rally, with possible Fed rate cuts in September.

Conclusion

The crypto market’s recent altcoin sell-off reflects cautious positioning ahead of the Federal Reserve’s rate decision. However, expert analysis suggests that softer inflation data and substantive crypto policy updates could act as strong bullish catalysts. Investors should monitor these developments closely, as they may drive significant price movements in Bitcoin and altcoins in the coming months.