Crypto Market Loses Momentum as Interest Rate Cut Hopes Diminish

By Francisco Rodrigues (all times ET unless otherwise specified) The crypto market appears to be losing steam. Over the past 24 hours, Bitcoin has dropped 3%, falling below $115,000, and is actually one of the top-performing major cryptocurrencies. The CoinDesk 20 index, which tracks the broader market, has declined by 6%, with Ether down 5.7% after achieving its strongest monthly gain in three years, and XRP losing over 7%. This downturn coincides with the implementation of some of President Donald Trump's tariffs, with additional tariffs set to take effect on August 7, ranging from 10% to 41% on imports from key trading partners such as Canada, the European Union, and Japan. As a result, Asian equity markets experienced their worst week since April, and the US dollar surged, pushing the dollar index above 100 for the first time since May. The tariffs have also led to an increase in the Federal Reserve's preferred inflation measure, the core PCE, which rose to 2.8% year-over-year in June, dampening hopes for an interest rate reduction in September. Polymarket traders have adjusted their expectations, moving from a perceived 56% chance of a rate cut to 38%, while the CME's FedWatch tool indicates a 39% chance. According to 21Shares strategist Matt Mena, 'looser financial conditions would be a significant boost for crypto.' Today's nonfarm payrolls data may prove decisive, with expectations that the US economy created 110,000 jobs last month. Options traders are already seeking protection against further declines. 'We're seeing increased short-term bearish positioning on BTC, with capped upside strategies,' said Jake Ostrovski, an OTC trader at Wintermute. 'In contrast, ETH options for late August are more balanced, with some outright bullish positioning.' If economic data points to higher interest rates for an extended period, traders may shift towards assets that benefit from tighter conditions. A stronger dollar and higher interest rates could lead investors towards yield-bearing stablecoins or transparent ETH-based vaults, given the passage of the GENIUS Act into law. Stay informed! Key Events to Watch Upcoming Conferences The CoinDesk Policy & Regulation conference, a boutique event, will be held in Washington on September 10, bringing together general counsels, compliance officers, and regulatory executives with public officials responsible for crypto legislation and oversight. Limited spaces are available; use code CDB10 for a 10% discount on registration through August 31. Token Talk By Francisco Rodrigues Derivatives Positioning Market Trends Bitcoin Statistics Technical Analysis Crypto Equities ETF Flows Spot BTC ETFs Spot ETH ETFs Source: Farside Investors Overnight Flows Chart of the Day While You Were Sleeping In the Ether