Altcoins took a hit on Tuesday as cryptocurrency markets displayed caution ahead of the Federal Reserve’s upcoming monetary policy decision, with Cardano’s ADA and Ripple’s XRP leading losses among major cryptocurrencies.
Market Performance
Bitcoin, the largest cryptocurrency by market capitalization, maintained its position above the $94,000 threshold after briefly dipping below that level over the weekend. The leading digital asset has been trading within a relatively narrow range in recent days as investors await potential market-moving signals from the Federal Open Market Committee (FOMC).
Meanwhile, several altcoins experienced significant downward pressure:
- Cardano’s ADA dropped nearly 4%
- XRP slid by a similar margin
- Ethereum (ETH) fell approximately 1%
- Dogecoin (DOGE) declined 2% over the past 24 hours
In contrast, BNB Chain’s native token BNB bucked the trend with a 1.3% increase. The broad-based CoinDesk 20 index, which tracks the performance of the largest digital assets by market capitalization, dropped just over 1.8% during the same period.
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DeFi Tokens Buck the Trend
While most major cryptocurrencies struggled, decentralized finance (DeFi) tokens have shown remarkable strength over the past week. Tokens such as AAVE, Curve’s CRV, and Hyperliquid’s HYPE have experienced significant gains, with HYPE leading the pack with a remarkable 72% surge among the top 100 tokens. AAVE and CRV have also posted impressive gains of up to 40%.
“As memecoins fall out of favor, traders are turning to projects with stronger fundamentals and token economics,” explained Kay Lu, CEO of HashKey Eco Labs. “DeFi ecosystems are benefiting from this pivot, especially as Bitcoin shows decreased volatility and macro uncertainty lingers.“
Lu expressed optimism about the continuation of this trend, noting that cryptocurrency markets could serve as a hedge against economic uncertainty if Bitcoin maintains its current stability pattern.
All Eyes on Powell
Cryptocurrency traders, like their counterparts in traditional financial markets, are closely monitoring this week’s FOMC interest rate decision. While consensus expectations suggest the Federal Reserve will maintain current rates, market participants remain cautious due to ongoing concerns about inflation, tariffs, and escalating U.S.-China trade tensions.
“We don’t expect the FOMC to trigger a major move in markets,” said Augustine Fan, Head of Insights at SignalPlus. “It’s a coin flip on direction. Crypto will likely take cues from broader earnings growth and how the economy digests the impact of recent trade policies.“
Fan noted that recent stock market performance indicates investors are pricing in only a mild recession risk of approximately 8%, according to historical drawdown models. This relatively optimistic outlook contrasts with more bearish signals emerging from bond markets and macroeconomic forecasts.
Trade Tensions Linger
The cryptocurrency market’s cautious stance also reflects broader economic concerns. Last week, President Trump confirmed there were no immediate plans for talks with China, dampening hopes for a breakthrough in trade negotiations between the world’s two largest economies.
However, the possibility of separate trade agreements has helped maintain positive risk sentiment across financial markets. This delicate balance between trade concerns and economic resilience continues to influence cryptocurrency price action as traders position themselves ahead of the Federal Reserve’s policy announcement.
As the market awaits Federal Reserve Chair Jerome Powell’s comments for clues about future monetary policy direction, cryptocurrency traders remain cautious but vigilant for opportunities in this evolving market landscape.
