The macro landscape and Congress continue to feature prominently in this week’s top crypto headlines. Here’s a recap of key updates that shaped the markets in the past 48 hours.
Bitcoin extends losses after FOMC Minutes
Bitcoin extended its weekly losses to 7% following the release of Federal Open Market Committee (FOMC) Minutes on the 18th of February.
The FOMC Minutes were mildly hawkish and cemented the ‘interest rate cut pause’ for the March Fed meeting.
Source: CME FedWatch Tool
With low expectations for a Fed rate cut in March (less than 6%), risk sentiment declined, dragging BTC to a low of $ 65,800 during the Wednesday intraday session. From Sunday’s peak of $70.9K, this was a 7% decline this week, further straining the broader altcoin market.
Notably, the broader market was still in ‘extreme fear.’ Ethereum [ETH] extended its weekly losses to 10% and was barely holding the $ 2,000 level. At the same time, Solana [SOL] dropped 4%, bringing the weekly decline to 11%, but it defended the $80 level.
On the other hand, Ripple[XRP] was down a whopping 15% since the 15th of February and had fallen below $1.5.
Market focus will now shift to Friday’s Personal Consumption Expenditure (PCE), the Fed’s favorite inflation print.
A hotter-than-expected inflation print could further dent risk sentiment and drag the crypto market lower. Conversely, cooler PCE data could offer slight market relief over the weekend.
Fed backs prediction markets
Still on the Fed, the regulator has thrown its support behind prediction markets after a recent study on Kalshi, the first U.S.-regulated player in the sector.
According to Federal Reserve research, Kalshi’s market for macroeconomic outcomes (inflation, unemployment, Fed decisions, GDP, etc.) provides real-time tracking of expectations.
In some cases, the Fed added, prediction markets are even better than alternatives such as Bloomberg consensus, which rely on surveys and polls. According to the regulator, surveys are updated slowly at various intervals, unlike Kalshi’s real-time data.
“Our study highlights the promise of prediction markets as a new benchmark for measuring expectations and informing monetary policy decisions.”
This is a resounding endorsement from the government for the budding segment. However, the oversight battle between the CFTC and state regulators remains a key threat to the full development of prediction markets.
Coinbase CEO sees a ‘win-win-win outcome’ for CLARITY Act
Finally, Coinbase CEO Brian Armstrong now expects the CLARITY Act negotiations to end in a ‘win-win-win outcome’ for consumers, crypto, and the banking industry.
Speaking in a recent CNBC interview, Armstrong said the ongoing discussion about stablecoin yields was on a positive path forward.
“Market structure is making great progress, and I believe we’re going to reach a win-win-win outcome.”
The White House has been meeting with industry players to broker a deal on the same to advance the CLARITY Act. The third meeting, scheduled for the 19th of February, will further explore a compromise on stablecoin rewards to unlock the bill.
In a separate Mar-a-Lago event, Sen. Bernie Moreno (R-OH) projected that the bill could be passed “hopefully by the end of April.” The odds of passage on Polymarket rose wildly to 85% but crashed to 55% at the time of writing.
But Sen. Moreno insisted that the already passed stablecoin law, the GENIUS Act, won’t be amended to favor banks’ interests.
Final Summary
- Fed rate cut expectations in March dropped further after the FOMC Minutes on Wednesday, further dragging BTC and the broader crypto market lower.
- Coinbase CEO expects a ‘win-win-win’ outcome for CLARITY Act ahead of the third round of White House negotiations on stablecoin rewards issue.