Bitcoin’s price has stabilized around $41,000 following a significant leverage flush and the largest daily drawdown since mid-August. As crypto traders digest these developments, they are closely watching the last U.S. interest rate decision of the year, which is scheduled for Wednesday. Bitcoin briefly recovered to $42,000 before dipping to $40,600 in the U.S. afternoon hours, but it has since regained some losses and is currently trading at $41,300, up 0.3% over the past 24 hours.
Ether, the second largest cryptocurrency, experienced a decline of 1% during the same period, dropping below $2,200. While the momentum of these two leading cryptocurrencies slowed, several altcoins saw significant gains. Native tokens of Polkadot (DOT), Cosmos (ATOM), and Injective (INJ) were among the best-performing crypto majors, with gains ranging from 10% to 20% over the past 24 hours.
In addition, Avalanche (AVAX) has overtaken the popular meme token dogecoin (DOGE) in terms of market capitalization. AVAX gained nearly 5% on the day and more than doubled its price in just one month. Another standout performer is Celestia TIA, a recently launched blockchain data solution, which surged 20% to reach a new all-time high. Celestia TIA announced that it will become an option for blockchain builders using Polygon’s software tools to create new layer-2 networks on Ethereum.
Despite the positive performance of these altcoins, Aptos’ token (APT) also rallied 16%, even though over $200 million worth of previously locked-up tokens were released to its outstanding supply. The rally in APT is seen as a defiance of this event.
The broader market sentiment is reflected in the CoinDesk Market Index (CMI), which tracks a weighted basket of nearly 200 digital assets. The CMI was up 1.2% over the past 24 hours, indicating an overall positive trend.
Looking ahead, market observers widely anticipate that the Federal Reserve will hold Fed fund rates steady at 5.25%-5.5% during Wednesday’s Federal Open Market Committee (FOMC) meeting. This expectation is driven by the continued decline in Consumer Price Index (CPI) inflation in November. The prevailing disinflationary trend is likely to prompt the Fed to pause rate hikes for the third consecutive occasion.
Investors will closely monitor Fed Chair Jerome Powell’s press conference following the rate decision for any signals of potential rate cuts in the coming year. Bitfinex analysts suggest that a pause in rate hikes by the Fed could be interpreted as a bullish signal for the market, and historically, cryptocurrencies have often experienced positive movements following decisions to keep interest rates stable.
Overall, the crypto market remains steady as Bitcoin stabilizes around $41,000, altcoins experience significant gains, and traders eagerly await the Fed’s rate decision.