The macro landscape and Congress remain prominent in this week’s top crypto news headlines. Here’s a summary of the key updates that have shaped the markets over the past 48 hours.
Bitcoin Extends Losses After FOMC Minutes
Bitcoin extended its weekly losses to 7% after the release of the Federal Open Market Committee (FOMC) minutes on February 18.
The FOMC minutes were somewhat hawkish, reinforcing the “rate cutting 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 is high fell, dragging BTC to a low of $65,800 during the intraday session on Wednesday. From Sunday’s peak of $70.9,000, this was a 7% decline this week, putting further pressure on the broader altcoin market.
Notably, the broader market was still in ‘extreme fear’. Ethereum [ETH] extended its weekly losses to 10% and barely held the $2,000 level. At the same time Solana [SOL] fell 4%, bringing the weekly decline to 11%, but defended the $80 level.
On the other side Ripple[XRP] fell by as much as 15% since February 15 and had fallen below $1.5.
The market focus will now shift to Friday’s Personal Consumption Expenditure (PCE), the Fed’s favorite inflation pressure.
Hotter-than-expected inflation could further dent risk sentiment and drag the crypto market down. Conversely, cooler PCE data could provide some relief to the market this weekend.
Fed Backs Prediction Markets
Still at the Fed, the regulator has thrown its support behind the prediction markets following a recent investigation into Kalshi, the industry’s first US-regulated player.
According to the Federal Reserve researchKalshi’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 like the Bloomberg consensus, which relies on surveys and polls. According to the regulator, surveys are updated slowly and at varying 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 statement of support from the government for the emerging segment. However, the regulatory battle between the CFTC and state regulators remains a significant threat to the full development of prediction markets.
Coinbase CEO sees a ‘win-win-win outcome’ for the CLARITY Act
Finally, Coinbase CEO Brian Armstrong now expects the CLARITY Act negotiations to end in a “win-win-win outcome” for consumers, cryptocurrencies, and the banking industry.
Armstrong spoke in a recent CNBC interview said the ongoing discussion about stablecoin returns has been positive.
“The market structure is making great progress and I believe we will achieve a win-win-win outcome.”
The White House has been meeting with industry players to broker a deal on this to advance the CLARITY Act. The third meeting, scheduled for February 19, will further explore a compromise on stablecoin rewards to unlock the account.
At a separate Mar-a-Lago event, Senator Bernie Moreno (R-OH) predicted that the bill could pass “hopefully by the end of April.” The chances The number of passes on Polymarket soared to 85%, but dropped to 55% at the time of writing.
But Senator Moreno emphasized that the already passed stablecoin law, the GENIUS Act, will not be changed to favor the interests of the banks.
Final summary
- Expectations for Fed rate cuts in March fell further after Wednesday’s FOMC minutes, dragging BTC and the broader crypto market further down.
- Coinbase’s CEO expects a ‘win-win-win’ outcome for the CLARITY Act ahead of the third round of White House negotiations on the stablecoin rewards issue.