Bitcoin and Ethereum continued their downward slide on Sunday, as traders braced for a volatile week amid macroeconomic uncertainty and regulatory shifts. The leading cryptocurrencies faced fresh selling pressure as U.S. stock futures pointed lower ahead of the Federal Reserve’s key policy meeting this week.
Crypto Market Decline Intensifies
Bitcoin (BTC) fell nearly 1.8% to trade around $82,700, while Ethereum (ETH) dropped 2.5% to $1,889, reflecting broader investor caution. The decline follows concerns over interest rate decisions and geopolitical tensions that have rattled financial markets.
As of Sunday evening, futures tied to major U.S. stock indices signaled a bearish start to the week. Dow Jones Industrial Average futures slipped 0.37%, while the S&P 500 and Nasdaq Composite futures lost 0.46% and 0.55%, respectively. The correlation between cryptocurrencies and equities remains strong, meaning further declines in stocks could weigh on digital assets as well.
Investors are closely watching the Federal Reserve’s upcoming policy meeting, with futures traders largely expecting the central bank to hold interest rates steady. However, recent economic data, including strong labor market figures and persistent inflation, have raised doubts about the timeline for potential rate cuts later in 2024.
If the Fed signals a more hawkish stance or hints at delaying rate reductions, risk assets like Bitcoin and Ethereum could see additional selling pressure. A prolonged period of high interest rates often dampens risk appetite, as investors opt for safer assets over speculative ones.
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Geopolitical Tensions Add to Market Uncertainty
Adding to the uncertainty, former President Donald Trump recently announced new tariffs, sparking concerns about potential retaliatory measures from the European Union. Such trade disputes could disrupt global markets, further pressuring investor sentiment.
Additionally, Trump’s executive order to establish a Strategic Bitcoin Reserve briefly fueled speculation about U.S. government involvement in crypto markets. However, the lack of immediate budget allocation for purchases led to a swift reversal in Bitcoin’s price after an initial spike.
According to data from Coinglass, open interest in crypto futures remains high, despite over $253 million in liquidations over the past 24 hours. Funding rates, which briefly turned negative during last week’s sell-off, have returned to neutral, indicating that traders remain uncertain about the market’s next move.
With mounting macroeconomic risks and ongoing regulatory developments, traders are searching for a catalyst that could reverse the current downtrend. The Federal Reserve’s policy decision on Wednesday will be a crucial moment, as any hawkish signals could lead to further downside for cryptocurrencies.
Beyond central bank policy, institutional interest and regulatory clarity will play key roles in determining Bitcoin and Ethereum’s next direction. If major financial players or regulatory bodies introduce favorable policies, it could help stabilize the market and restore bullish momentum.
