In a continuation of its downward trend, Bitcoin experienced another drop on Tuesday, marking the third consecutive day of declines. Market participants are adopting a cautious stance, largely due to the uncertainties surrounding U.S. trade tariffs and the ambiguous outlook of the Federal Reserve's interest rate policies.
By 01:14 ET (5:14 GMT), the world's largest cryptocurrency, Bitcoin, had inched 0.8% lower, reaching a value of $95,424.7.
Investors are intently observing the evolving landscape of U.S. trade policy. The administration of President Donald Trump has signaled the potential implementation of new reciprocal tariffs on all countries that impose taxes on U.S. imports.
The prospect of escalating trade tensions has stoked fears of a slowdown in global economic growth. Such a slowdown could have a detrimental impact on risk assets, and Bitcoin, as a prominent risk asset in the cryptocurrency realm, is not immune to these concerns.
Analysts have noted that cryptocurrencies, often regarded as a barometer reflecting investors' risk appetite, are particularly sensitive to fluctuations in macroeconomic sentiment. The current air of uncertainty is keeping the crypto market on edge.
Adding to the prevailing cautious sentiment, the markets are eagerly awaiting more definitive guidance regarding the Federal Reserve's monetary policy trajectory.
Last week's release of the latest U.S. Consumer Price Index (CPI) data showed that inflation persists above the Federal Reserve's target of 2%. This has led to increased speculation that the central bank might maintain a hawkish stance for an extended period, longer than what was initially anticipated.
Typically, higher interest rates tend to reduce the allure of non-yielding assets like Bitcoin. As investors seek safer and more stable returns, they often turn towards traditional markets.
Standard Chartered (OTC:SCBFF) Bank (Hong Kong) (HK:2888), Animoca Brands, and Hong Kong Telecommunications (HKT) (HK:6823) have announced a joint venture initiative. The objective of this venture is to apply for a license from the Hong Kong Monetary Authority (HKMA) to issue a stablecoin that is backed by the Hong Kong dollar.
This collaborative effort aims to leverage Animoca Brands' in-depth expertise in blockchain technology and HKT's extensive telecommunications services. By doing so, they intend to explore the vast opportunities within the cryptocurrency market and enhance both domestic and cross-border payment systems.
Stablecoins are digital assets designed with the specific purpose of maintaining a fixed value relative to a government-issued fiat currency or another reference rate. Historically, they have served as a crucial bridge for transactions involving digital assets on blockchain platforms, which typically cannot directly interact with traditional fiat currencies.
This strategic move comes at a time when Hong Kong policymakers are actively driving forward initiatives aimed at positioning the city as a leading global cryptocurrency hub.
Concurrently, there is a growing wave of enthusiasm for the adoption of stablecoins and the introduction of cryptocurrency exchange-traded funds (ETFs).
Financial institutions are increasingly recognizing the potential of stablecoins and ETFs to provide more secure and accessible investment pathways. This, in turn, is expected to attract a wider and more diverse range of investors to the cryptocurrency market.
In the wake of a broader risk-off sentiment in the market, most altcoins have followed Bitcoin's downward movement. However, they have experienced significantly more substantial declines compared to Bitcoin.
On Tuesday, Ether, the world's second-largest cryptocurrency, saw a marginal decrease of 0.8%, reaching a value of $2,663.8.
XRP, the world's third-largest cryptocurrency, recorded a more significant drop of 4%, falling to $2.5684.
Solana witnessed a dramatic plunge of 9.1%, while Polygon declined by 5.1%, and Cardano saw a decrease of 3.4%.
Among meme tokens, Dogecoin experienced a fall of 5.3%, and $TRUMP saw a steeper decline of 7.6%.
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