Crypto Market Falls Despite Fed Freeze…Risk Assets 'Wobble' on 3 Rate Hike Advocates

▲ Bitcoin (BTC), Dollar (USD)/AI Generated Image ©

Despite the U.S. Federal Reserve (Fed) freezing the benchmark interest rate, the cryptocurrency market fell by 0.76% as opinions for a rate hike emerged internally. The overall investment sentiment in the market was dampened by the outflow of funds from Bitcoin spot ETFs and the sharp decline in tokenized semiconductor stocks.

According to CoinMarketCap, a cryptocurrency market aggregation site, on July 29 (local time), the total cryptocurrency market capitalization decreased by 0.76% over 24 hours to $2.17 trillion. The 24-hour correlation between the cryptocurrency market and the S&P 500 index reached 76%, indicating that this decline was a macroeconomic sell-off sensitive to interest rate policy rather than internal factors of virtual assets.

The U.S. Federal Open Market Committee (FOMC) decided to freeze the benchmark interest rate with a 9-3 vote. However, with dissenting votes appearing for the first time this year and three members advocating for a rate hike, uncertainty surrounding monetary policy grew. Fed Chairman Kevin Warsh also adopted a hawkish stance on inflation, leading to a decline in U.S. stock markets, including a more than 2% drop in the Dow Jones Industrial Average, which in turn caused the cryptocurrency market to fall. Interest rate uncertainty overshadowed regulatory tailwinds such as the U.S. crypto market structure bill and the Clarity Act.

Weakening institutional demand also increased downward pressure. Bitcoin (BTC) spot ETFs recorded net outflows for four consecutive trading days, with cumulative outflows exceeding $526 million. Simultaneously, tokenized semiconductor stocks such as SanDisk and SK Hynix-related products plummeted by 8-42%, spreading sell-offs across high-risk assets. Analysts suggest that for a market rebound, daily fund flows into Bitcoin spot ETFs must turn into net inflows, confirming a recovery in institutional investor sentiment.

The short-term direction depends on whether Bitcoin maintains its $64,000 support. If this price, considered a key defense line for long-term holders, breaks, the total cryptocurrency market capitalization could fall to $2.08 trillion, the Fibonacci 78.6% retracement level. The next major variable is the U.S. July employment report to be released on August 1. It is believed that risk asset investor sentiment can only recover if economic indicators slow enough to ease interest rate hike concerns without triggering recession fears.

The market is currently in a cautious adjustment phase where macroeconomic uncertainty outweighs regulatory tailwinds. While buying pressure from long-term holders supports the downside, it will be difficult to find a clear direction until Bitcoin holds $64,000 and spot ETF fund flows improve.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*