Bitcoin hovers below $26K as investors monitor CPI data and FOMC rate hike decision.

Bitcoin briefly rose above $26,000 early on Monday but quickly fell back to levels seen recently, below this mark. The cryptocurrency with the largest market cap has been trading at $25,850 recently, down 1% over the past 24 hours. Last week, BTC fell to $26,000 after the US Securities and Exchange Commission (SEC) filed lawsuits against crypto exchange giants Binance and Coinbase, and investors continued to worry about the US central bank’s monetary policy aimed at fighting inflation. The release of the May Consumer Price Index (CPI) on Tuesday and the Federal Reserve’s interest rate decision on Wednesday will be closely watched by investors.

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“The Cryptoverse is stuck in limbo as regulatory fears run wild and as some investors abandon certain key exchanges,” said Edward Moya, a senior market analyst at foreign exchange market maker Oanda, in an email. “Mainstream acceptance for crypto won’t occur with DeFi. While experienced crypto traders move more of their trading volumes onto DeFi, this is not good news for long-term growth and for attracting new investors.” Moya noted that “bitcoin has key support at the $25,400 region” ahead of the CPI report and Fed decision.

Ether was recently trading at around $1,735, down 1.8% from Sunday, as it was also affected by a larger market downturn that saw major tokens mentioned in the SEC lawsuits fall. SOL, the token of the Solana blockchain, recently fell by almost 7%, while MATIC and ADA, the native cryptos of the Polygon and Cardana smart contracts platforms, fell by about 2.8% and 1.5%, respectively. Meanwhile, the blockchain Ethereum Trend Indicator fell into the downtrend territory a week after rising into the significant upturn category, indicating sagging investor sentiment.

The path of cryptos diverged from major US equity indexes, which rose, buoyed by a recent surge in large tech stocks. The S&P 500 climbed 0.9% to reach its highest level in a year, the tech-heavy Nasdaq jumped 1.5%, while the Dow Jones Industrial Average added 0.5%. The yield on the 10-year Treasury ticked up to 3.73%. Gold, which has often traded similarly to digital assets, fell 0.2%.

Strahinja Savic, head of data and analytics at Toronto-based crypto platform FRNT Financial, noted in a Telegram message to blockchain that the coins affected by last week’s SEC actions are underperforming. However, he reminded optimistically that Ripple’s XRP token lost significant ground in 2020 before rallying strongly months later. “(The) XRP market cap now is roughly where it was just before the SEC sued Ripple,” Savic wrote. “We’ll see if the assets named in the SEC’s lawsuits will show similar resilience amid the regulatory complexity coming from these (Binance, Coinbase) cases.”

Edited by James Rubin.