Americas Crypto Market Update: Traders Reduce Leverage Amid Stable Interest Rate Outlook

By Francisco Rodrigues (All times are in Eastern Time unless stated otherwise) Following the release of the FOMC minutes, which indicated the Fed's intention to maintain steady interest rates until inflation improves, crypto traders have begun to reduce their leverage. The minutes also discussed the possibility of pausing or slowing down the balance sheet runoff. Despite this, the yield on the 10-year Treasury has decreased and the dollar has weakened. The cryptocurrency market has seen an uptrend, with the CoinDesk 20 Index increasing by 1.4% and bitcoin rising by 1.2% over the past 24 hours. This surge is attributed to remarks made by Czech National Bank Governor Ales Michl, who reiterated the potential of bitcoin as a reserve asset, and President Donald Trump's statement about ending the 'war on Bitcoin and crypto'. Bitcoin traders are adopting a cautious approach due to declining demand, reduced blockchain activity, and slowing liquidity inflows, which may lead to a potential pullback to $86,000. Currently, bitcoin is trading above $97,000. This cautious stance is reflected in the declining volatility and a significant drop in open interest. According to Coinglass data, open interest on bitcoin futures contracts has fallen below $60 billion, down from nearly $70 billion in late January. This decline coincides with the apparent decline of the memecoin craze, which has been dampened by recent struggles such as Argentina's Libra debacle. The market is currently in a 'cooldown phase', according to David Gogel, VP of strategy and operations at the dYdX Foundation, who spoke to CoinDesk. 'Bitcoin has been holding up, but after failing to break past $105k in January, we've seen capital inflows slow down and speculative assets like Solana and memecoins take a hit.' This impact is evident in the aggregate open interest for futures contracts of SOL, the native token of the Solana blockchain. Open interest has dropped from around $6 billion late last month to around $4.3 billion now, according to data from TheTie. Solana is one of the leading networks for memecoins. Wintermute OTC trader Jake O advised CoinDesk that the market should remain alert to broader macro-drivers and geopolitical developments that could trigger moves. These developments include rising tensions between Trump and Ukrainian President Volodymyr Zelensky, which led to a public exchange. The decline in leverage and shift away from riskier investments suggest that the market may be entering a new phase. The nature of this phase remains to be seen. Stay vigilant! Key Events to Watch Upcoming Conferences: CoinDesk's Consensus is scheduled to take place in Hong Kong on February 18-20 and in Toronto on May 14-16. Use the code DAYBOOK to receive a 15% discount on passes. Token Talk By Oliver Knight 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