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Bitcoin (BTC) and ether (ETH) were mirroring the lackluster performance of traditional finance in anticipation of Wednesday's crucial FOMC rate decision during the Asia trading session. According to CoinCryptoUs data, the largest digital asset in the world was trading at $29,213, while ether was changing hands at $1,853 as the trading day in East Asia concluded.

Analysts suggest that a significant breakthrough will only occur when the Fed alters its rate decisions or when the Securities and Exchange Commission greenlights a bitcoin ETF.

Over a month ago, Bitcoin surged past the $30,000 mark following the news of finance giant BlackRock's application for a bitcoin ETF. This move fueled speculation that, if approved by regulators, it could lead to a substantial influx of funds from traditional investors into the digital asset space. However, since then, the price has been relatively stagnant, hovering around that level. One of the contributing factors to this lack of significant movement is the concern surrounding the Federal Reserve's upcoming decision on July 26, which is expected to result in a 25 basis point (bps) interest rate increase.

“The increase in liquidity is volatile and is currently quite flat. This is because many central banks are still tightening, and China’s policy is still unclear, so it’s still too early to call for a bull market in digital assets, however, these ranges represent excellent accumulation zones for those with a long-term outlook,” Vivien Fang, head of financial products at Bybit, told CoinCryptoUs.

Bitcoin experienced a sharp decline, dropping below the $29,000 mark on Monday, which marked its lowest point since June. The dip came following a report from The Wall Street Journal, which revealed that Binance CEO Changpeng "CZ" Zhao had privately mentioned the possibility of the crypto exchange's affiliates engaging in wash trading several years ago. Additionally, China's policymakers added to the market uncertainty by warning of a challenging and lengthy economic recovery ahead.

"Inflation and rate concerns could be what [has been] keeping crypto prices depressed," Noelle Acheson wrote in her "Crypto is Macro" newsletter Tuesday. "These usually recover relatively quickly, but the new lower BTC level seems to be holding, reinforcing the idea that there are just not enough new buyers ready to take positions yet."

Based on Coinglass data, there has been a liquidation of $5.68 million worth of short positions in the past 12 hours, compared to $9.3 million in long positions. In general, on-chain data indicates that 49% of traders are opting for long positions on Bitcoin, while 50% are taking short positions.

Beyond the realm of cryptocurrencies, concerns within the U.S. banking sector reemerged overnight, causing shares of regional lender PacWest Bancorp (PACW) to plummet by over 26%. Interestingly, in stark contrast to its previous bullish reaction to banking sector instability in March, Bitcoin showed minimal movement this time.

Dogecoin (DOGE)

Dogecoin witnessed its most significant one-day surge in four months, soaring by 10% amidst widespread speculation about its potential integration into the revamped Twitter platform. This development has also led to a remarkable milestone in the futures market, with open interest surpassing $500M for the first time since April.

Musk has taken a special interest in DOGE with his various pronouncements even before he acquired Twitter, driving the token's price. “Elon clearly has an affinity for DOGE, almost as part of a running joke, but I wouldn’t be surprised if he actually went through with enabling payments via DOGE,” Brian D. Evans, CEO and founder of BDE Ventures, a Web3 venture studio and advisory firm, told CoinCryptoUs.

Ether (ETH), XRP, Solana (SOL)

Ether (ETH), the second-largest cryptocurrency by market value, was trading at approximately $1,853, marking a 0.16% increase compared to its price 24 hours ago. Other prominent altcoins also experienced positive movements, with XRP rising by 2.3%, and SOL, the native cryptocurrency of the Solana smart contracts platform, gaining 2.24%.

The CoinDesk Market Index, which serves as a gauge of the overall cryptocurrency market performance, experienced a recent increase of 0.38%. However, the CoinCryptoUs Bitcoin and Ethereum trend indicators are currently in neutral territory, marking a shift from the earlier trend when they remained steadily in an uptrend mode.

"Some investors may be taking profits as they bet on hawkish language from the U.S. Fed following reports of rising house prices in the worlds biggest economy, which will likely give the [Federal Open Market Committee] reason to continue hiking rates throughout the year," Tim Frost, CEO of digital wealth platform Yield App, wrote in an email to CoinCryptoUs.