Bitcoin, XRP, Ethereum Slip as Crypto Rally Stalls. Fed Rate Cuts in Focus After CPI Report. — Barrons.com
By Callum KeownBitcoin, XRP, and other cryptocurrencies fell slightly Thursday as investors digested the latest inflation data ahead of next week's Federal Reserve interest-rate decision.The consumer price index climbed 2.9% year over year in August, in line with economists' expectations.Cryptocurrencies have been boosted recently by hopes of multiple interest-rate cuts by the end of the year. Thursday's CPI data didn't move the dial when it comes to next week's decision — traders still see a 91% chance of a quarter-point reduction, and a 9% probability of a half-point cut, according to CME's FedWatch tool.Interest-rate cuts tend to support cryptocurrencies, as lower borrowing costs make risky assets more attractive relative to lower-yielding investments, such as bonds.Traders are more confident in the central bank cutting three times this year — giving that a 78% chance of happening, up from 68% Wednesday.However, cryptocurrencies struggled to hold on to their gains. Bitcoin was trading at $113,536, down 0.4% over the past 24 hours, according to CoinDesk data. The world's largest cryptocurrency climbed above $114,000 earlier in the day, for the first time since August 24. Bitcoin is now up 4.5% so far in September.Ethereum, the second-biggest digital asset, slipped 0.5% to $4,391, while popular altcoin XRP was down 1% at $2.98. Solana rose 0.1% and Dogecoin was up 0.6%."Bitcoin's rebound to $114,000 looks more like repositioning, rather than the start of a new surge. Markets are still expecting a Fed rate cut in September, with traders waiting for this week's inflation data," analysts at crypto payment solution business B2BINPAY said."For now, we expect sideways trading, with Bitcoin continuing to hold an edge over other tokens," they added.A clearer path on rate cuts, as the Fed's meeting approaches, can still lift digital assets despite Thursday's slight weakness.And it isn't just macroeconomic factors that can help digital assets. The hype around crypto treasury companies and crypto IPOs looks set to continue.Stablecoin issuer Figure Technology raised $787.5 million from its initial public offering, the company said in a filing Wednesday. The stock is set to begin trading later Thursday under the ticker FIGR.Figure priced its shares at $25 — above the previous $20 to $22 range, in keeping with the recent trend of red hot IPOs. CoinDesk owner Bullish and fellow stablecoin company Circle internet Group both enjoyed successful debuts earlier this year.There's also the emergence of crypto treasury companies, following the model used by Strategy, formerly known as MicroStrategy. QMMM Holdings, Eightco, and 180 Life Sciences — since renamed to ETHZilla — are among the stocks that have skyrocketed recently.Write to Callum Keown at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.