The cryptocurrency market continues to experience selling pressure as Ethereum’s price dropped by approximately 6% on April 30th, reaching its lowest level in over a week at $3,024. This decline in Ethereum’s price reflects similar downward movements seen across other cryptocurrencies, resulting in a 4% drop in the total market value.
There are several key factors contributing to the decrease in Ethereum’s price. Firstly, the newly launched crypto-linked spot exchange-traded funds (ETFs) in Hong Kong received a lukewarm response, which impacted investor sentiment. Additionally, the expected hawkish stance from the Federal Reserve also played a role in the price decline.
On April 30th, six crypto ETFs were launched in Hong Kong, but they significantly underperformed, only achieving $11 million in total trading volume, well below the anticipated $100 million. Of this total, $8.5 million came from Bitcoin ETFs, while the remaining amount was attributed to Ethereum ETFs.
This performance is in stark contrast to the U.S.-based spot Bitcoin ETFs launched on January 11th, which saw a first-day trading volume of $655 million and have since attracted nearly $12 billion in investor funds. However, the momentum has slowed down recently, impacting Bitcoin’s upward trend and dragging down other cryptocurrencies like Ethereum that are positively correlated.
The drop in Ethereum’s price today is mainly driven by concerns that the Federal Reserve may maintain its hawkish stance during the Federal Open Market Committee meeting on May 1st. CME data indicates that expectations for interest rate cuts have been postponed to late 2024, with no more than two cuts expected by the end of the year. This adjustment is primarily due to persistent inflation and the sluggish U.S. economy.
The crypto market has historically seen declines leading up to FOMC meetings, indicating increased caution among investors. For example, market valuation dropped by over 10% before the March FOMC meeting and around 5% before the January meeting. Consequently, leading cryptocurrencies like Bitcoin and Ethereum also experienced price drops. This process demonstrates how investors adjust their positions in anticipation of anticipated changes in monetary policy.
Disclaimer: The information provided in this article should not be considered investment advice. Investors should be aware of the high volatility and risks associated with cryptocurrencies and conduct their own research.
