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Fed Chair Jerome Powell’s hawkish post-FOMC press conference overshadowed the dovish CPI and PPI inflation prints, resulting in a strong correction in crypto prices.
The crypto market is down 7% over the past week, CoinGecko’s total crypto market cap chart reveals.
While Bitcoin is down by 6% to trade under $67,000, altcoins such as Floki, Dogwifhat and Worldcoin are bearing the brunt of this crypto crash, all down by over 25%.
With macroeconomic risks again delaying the start of a bull run in large-cap cryptocurrencies, smart money traders are pivoting to new tokens and crypto presales for higher returns.
Why Are Crypto Prices Down Today?
The US Federal Reserve threw a wrench in what was otherwise turning out to be a bullish week for the cryptocurrency market.
The Bitcoin price bounced up to just under $70,000 after the CPI inflation for May beat market expectations. The CME FedWatch immediately started pricing in 2 interest rate cuts in 2024, a decidedly bullish scenario for risk-on assets.
However, the FOMC meeting on Wednesday acted as a spoilsport. Despite the central bank keeping its benchmark interest rate unchanged, the Fed’s Summary of Economic Projection – or the dot plot – now implies only one rate cut this year. Notably, the Fed’s March SEP forecasted three cuts in 2024.
Additionally, Fed officials also changed their inflation forecast for 2024 from 2.4% to 2.6% and the median core PCE inflation forecast from 2.6% to 2.8%.
SUMMARY OF FED DECISION (6/12/24):
1. Fed leaves rates unchanged for 7th straight meeting
2. Officials raise 2024 inflation forecast from 2.4% to 2.6%
3. Median forecasts shows just 1 rate cut in 2024
4. Median forecast shows 100 bps of rate cuts in 2025
5. Fed says…
— The Kobeissi Letter (@KobeissiLetter) June 12, 2024
A better-than-expected PPI inflation – released a day later on Thursday – failed to improve investors’ morale.
As it currently stands, BTC needs to defend several crucial support levels to avoid an even steeper downside move. For instance, a breakdown below the $66k price level could result in a test of the $60,000 – $61,000 range.
Stocks and Bonds Outperform The Crypto Market
The cryptocurrency market is underperforming global equities and commodities – including bonds and gold – this financial quarter.
A recent report from Bloomberg raised concerns as to whether the crypto bull market has run out of steam.
The performance of large-cap altcoins is particularly concerning. Altcoin crypto prices are nowhere near their last cycle’s peak valuations, while gold and stocks have already created multiple all-time highs this year.
However, bullish investors are not giving up hope, especially with several upcoming catalysts that could start a major bull run in cryptocurrencies. For instance, SEC Chairman Gary Gensler revealed that the spot Ethereum ETFs will go live at some point in July and August.
Furthermore, there is over a 60% probability that the Federal Reserve will cut interest rates in September. In fact, the CME FedWatch is still projecting a 44% chance of two rate cuts this year.
Finally, a potential Donald Trump victory in the upcoming US presidential elections could provide a major boost to crypto prices.
In the meantime, investors are pivoting to low-cap altcoins and crypto presales. Owing to their relatively smaller valuation, these assets do not show any considerable correlation to the large caps and still deliver significant returns.
Smart Money Investors Divest Into Presales
Bitcoin and large-cap altcoins are likely to show sideways consolidatory price action over the coming month. Consequently, crypto presales are surging in demand.
For instance, a new seal-themed Solana meme coin – Sealana ($SEAL) – is set to launch in the last week of June after raising over $4 million in its presale. Owing to its humorous mascot and simplified presale mode, $SEAL has attracted the attention of smart money investors and retailers alike.
Sealana’s IEO could not come at a more opportune time. The crypto market would likely still remain range-bound, resulting in significant demand for high-potential meme coins. Experts believe that the new meme coin could potentially see 10x growth immediately after its launch.
Similarly, an AI-powered meme coin WienerAI ($WAI) has raised close to $6 million in its presale. Aside from its memable part dog, part sausage-themed mascot, the project is launching its own AI trading bot.
Token holders can take advantage of AI-enhanced predictive trading, seamless swap and MEV protection at no additional costs.
AI coins and meme tokens are the two most in-demand asset classes during this bull market. Considering that WienerAI falls under both categories, experts believe that it could potentially deliver up to 100x returns.
*Cryptonomist did not write the article or test the platform.
