Crypto Market Overview

Crypto market participants are expected to exhibit continued caution, with Ether and Solana showing higher betas, according to a Coinbase analyst. The Thursday’s Coinbase Weekly report highlights that these altcoins have been more sensitive to market movements and may react more strongly to changes in the broader crypto market.

Market Sensitivity

Coinbase analyst David Duong stated, “We expect market players to remain cautious about their risk exposure in the weeks ahead, with both ETH (+1.68%) and SOL (+3.31%) showing higher betas of around 0.85 and 0.83, respectively.” Both Solana and Ether are seen as primary “beta plays,” exhibiting greater volatility than the overall market.

Inflation Data’s Impact

Eliézer Ndinga, Head of Strategy and Business Development at 21Shares, noted that the latest inflation data indicates a cooling yet stable environment, which is critical for the crypto market, especially following last week’s downturn. Despite positive inflation news, the largest cryptocurrency by market capitalization has not seen an upward trend and has declined, while stock indices traded higher. The inflation figures from Wednesday show U.S. year-on-year core consumer prices rose at the slowest pace since 2021.

Ndinga remarked, “With inflation coming in as expected, the possibility of a smaller 25bps rate cut by the Fed has increased, which may support risk-on assets.” However, Bitcoin and Ether reacted negatively initially, likely due to expectations of a more dovish rate cut.

The CME FedWatch tool indicates a 62.5% probability of a 25 basis-point cut by the Fed next month, and 37.5% probability of a 50 basis-point cut at the upcoming FOMC meeting.

Strategic Buying Opportunity

Despite the downturn, BRN analyst Valentin Fournier views the current dip as a strategic buying opportunity, predicting a rebound for Bitcoin targeting a price range of $65,000 to $68,000. Fournier stated, “This minor dip is good timing to keep increasing your exposure to both cryptocurrencies as bigger rallies are set to happen before the end of the year.”

Decline in Spot Market Volume

The seven-day moving average of Bitcoin exchange volume dropped from $19.62 billion to $11.5 billion over the past week, according to The Block’s Data Dashboard. Similarly, the seven-day moving average of total spot market volume across major exchanges fell from over $60 billion to just over $36 billion. This decline in volume may be due to a market shock from unwinding Japanese yen-funded carry trades, which impacted nearly all markets, according to Thursday’s Crypto Weekly report.