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The crypto market faced a cautious trading environment on Thursday as investors locked in profits after recent double-digit gains. Major cryptocurrencies, including Bitcoin and Ethereum, experienced slight declines, while several altcoins also saw notable drops.
Market Overview: Bitcoin, Ethereum, and Altcoins
As of Thursday, Bitcoin was trading at $102,700, reflecting a minor uptick of 1.24%. Meanwhile, Ethereum fell from its weekly high of $2,700 to $2,500, marking a 0.05% slip. Among top altcoins, Ripple (XRP) dropped by 4.76%, Solana (SOL) by 1%, and Shiba Inu (SHIB) by 2.53%. These declines come as the broader market consolidates after recent bullish momentum.
How Falling Crude Oil Prices Could Impact Cryptocurrencies
A potential driver for cryptocurrency prices is the ongoing decline in crude oil prices. Brent crude, the international benchmark, dropped for the second consecutive day to $63, while West Texas Intermediate (WTI) fell to $60.20, marking its lowest level since May 9. Both benchmarks are now down more than 25% from their yearly highs.
The drop in oil prices is partly attributed to comments made by former U.S. President Donald Trump, who suggested progress in indirect negotiations with Iran. A potential agreement could lead to Iran halting its nuclear program in exchange for lifted sanctions. Such a deal would likely result in increased Iranian oil exports, adding to global supply at a time when the OPEC+ cartel has already increased production for two consecutive months.
Why Falling Oil Prices Matter for the Crypto Market
Lower crude oil prices have the potential to reduce inflation, as they directly influence gasoline costs. According to recent data, U.S. gasoline prices have declined for three consecutive months. This trend could provide the Federal Reserve with more flexibility to cut interest rates, a move that historically benefits risk-on assets like cryptocurrencies.
“Bitcoin and most altcoins saw significant price surges in 2020 and 2021 when the Fed aggressively cut rates,” analysts noted.
Additionally, recent economic data revealed that U.S. inflation ticked lower in April. The headline Consumer Price Index (CPI) dropped from 2.4% in March to 2.3%, while core inflation held steady at 2.8%. These developments could foster a favorable environment for the crypto market.
US-China Trade Truce Signals Optimism
Another significant macroeconomic factor influencing the crypto market is the recent trade truce between the U.S. and China. Both nations have significantly reduced tariffs, with the U.S. cutting levies from 145% to 30% and China from 125% to 10%. This agreement has eased trade tensions and reduced recession risks globally.
Adding to the optimism, the U.K. recently finalized a trade agreement with the U.S. and is negotiating similar deals with the European Union and other countries. These developments are seen as steps toward stabilizing the global economy.
Impact on Crypto and Stock Markets
A strengthened stock market often correlates positively with cryptocurrencies, as both asset classes are influenced by risk sentiment. For instance, Goldman Sachs recently revised its S&P 500 forecast upward from $5,100 to $6,100, citing reduced recession risks. Such bullish sentiment in equities could spill over into the crypto market, boosting investor confidence.
As the crypto market navigates these macroeconomic dynamics, investors should remain informed about key trends and developments that may shape price movements in the coming weeks.
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