In recent weeks, the crypto market has been in the spotlight alongside news of global economic movements that have affected the dynamics of digital coins. In particular, the focus has been on the United States (US), which has released its economic growth data. During the July-September period, the US Gross Domestic Product (GDP) grew by 4.9% annually, surpassing market expectations and the previous growth rate of about 2.1%. This increase was accompanied by several factors such as increased consumer spending, inventory growth, stable exports, positive housing investments, and increased government spending. However, this has also raised concerns about the crypto market due to speculation about the interest rate policies of the US central bank, the Federal Reserve (The Fed).
Impact on Crypto Market
The impact of the US economic conditions was directly felt in the crypto market. Data from CoinMarketCap on Friday (27/10/2023) at 07:58 WIB showed various movements in several major digital coins. Bitcoin, despite still showing a weekly growth of 18.81%, experienced a decline of 1.66% to around US$34,053.72. Meanwhile, Ethereum saw a slight increase of 0.29% in the last 24 hours and 14.88% in the last seven days. XRP, although showing a weekly increase of 6.69%, was observed to weaken by 0.64% daily. On the other hand, Dogecoin showed an impressive performance with a 4.77% increase in the last 24 hours and 21.93% in a week.
Crypto Performance (10/27/2023)
Market Monitoring and Sentiment Analysis
Market monitoring from the CoinDesk Market Index (CMI) showed a decrease of 0.09% to 1,363.25, while open interest appreciated by 0.19% to US$29.62 billion. Attention was also focused on the bitcoin fear & greed index, which showed a slight decrease from 71 to 70, but the market is still in the greed category. Conversely, an alternative fear & greed index from coinmarketcap.com showed a figure of 71, indicating market optimism in facing the current economic and crypto industry conditions.
Managing Uncertainty and Future Outlook
These dynamic movements provide an overview of the uncertainty in the crypto market. Investors and market players must be alert to every signal of change to anticipate risks and take the right steps. The decrease in market indices and shifts in market sentiment are of primary concern for those who have digital assets in the crypto market.
Looking Ahead and Mitigating Risks
However, tensions surrounding the crypto market are not only sourced from US economic factors alone. Looking ahead, the attention of many parties is also focused on the actions of the Federal Reserve (The Fed) regarding interest rate policies. Although there is no certainty about interest rate hikes in the near future, many market participants have begun to consider the possibility of an interest rate hike at the December meeting. According to the FedWatch Tool, about 24% of market participants believe The Fed will raise interest rates by 25 basis points (bps) to 5.50-5.75%.
Navigating the Crypto Market Landscape
The crypto market, as part of the risk asset, is highly vulnerable to changes in macroeconomic policies, especially interest rate policies. An increase in interest rates can significantly affect capital flows, market liquidity, and investor sentiment. Therefore, crypto market participants are expected to remain vigilant and proactive in anticipating market changes that may occur.
In the coming weeks, the crypto market is expected to continue to face significant pressure due to varying sentiments. With the uncertain conditions, investors in the crypto market need to consider careful and strategic steps to mitigate risks and protect the value of their assets. With a deep understanding of market dynamics and the fundamental factors that affect them, investors can make wiser and more precise decisions in facing changes in the crypto market.