Bitcoin (COIN:BTCUSD) dropped to a two-week low on Wednesday as traders pared back positions ahead of the Federal Reserve’s Jackson Hole symposium and weighed potential developments in Russia-Ukraine talks.
The world’s largest cryptocurrency last traded 1.1% lower at $112,870. Earlier in the session, it briefly touched $112,668, approaching a six-week low. Bitcoin had surged past $124,000 last week, but strong U.S. economic data reduced expectations for a substantial Fed rate cut in September.
Investors eye Fed’s Jackson Hole comments
Market participants are preparing for the Fed’s annual meeting in Jackson Hole, where Chair Jerome Powell will speak Friday. A firmly hawkish tone or signals that undermine bets on a September rate cut could put additional pressure on risk assets, including Bitcoin. Futures markets now price in a 25-basis-point cut, down from earlier projections for a larger reduction.
Geopolitical risks weigh on sentiment
Geopolitical concerns also contributed to the pullback. U.S. President Donald Trump hosted Ukrainian President Volodymyr Zelenskiy and European leaders Monday to discuss future peace talks. He mentioned arranging direct discussions with Moscow and Kyiv and hinted at a possible trilateral summit. While any meaningful progress could boost global risk sentiment long-term, the near-term uncertainty is weighing on cryptocurrencies.
Fed official backs limited crypto holdings
Federal Reserve Vice Chair for Supervision Michelle Bowman said Tuesday that central bank employees should be allowed to hold small, “de minimis” amounts of crypto assets. She argued that such exposure would help regulators better understand emerging financial technologies. Bowman noted that while risks exist, they should be considered alongside potential benefits, signaling a more proactive stance on crypto oversight.
China explores yuan-backed stablecoins
China is reportedly considering a policy that would allow yuan-backed stablecoins, aiming to increase international adoption of its currency, according to Reuters. The State Council will review a roadmap later this month defining global yuan targets, regulatory duties, and risk management measures. Senior officials are also expected to discuss stablecoins’ role in promoting yuan internationalization, potentially setting clear policy guidance.
Altcoins track Bitcoin lower
Altcoins followed Bitcoin’s retreat, with Ether down nearly 4% to $4,120.40, XRP off 5.5% at $2.82, Solana down 2.2%, Cardano dropping over 8%, and Polygon falling 6.3%. Meme coins also fell, as Dogecoin dipped 4.5% and $TRUMP lost 3%.
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