Some experts believe the sector’s negative dynamics began after the first U.S. Federal Reserve rate cut of the year—25 basis points—triggered profit-taking by investors, with additional pressure later coming from political and monetary factors. Investors are concerned about President Donald Trump’s new initiative to impose a $100,000 fee on H-1B visas for highly skilled foreign workers. Such measures could negatively affect technology and financial companies, as well as the digital industry, which heavily relies on specialists of primarily Indian and Chinese origin.
Additionally, at an event hosted by the Greater Providence Chamber of Commerce in Rhode Island, Fed Chair Jerome Powell noted that competing risks of high inflation and a weakening labor market complicate future monetary policy decisions. Traders interpreted this as a potential signal that the Fed may halt further rate cuts. These concerns were further amplified by U.S. GDP growth of 3.8% in Q2, exceeding forecasts of 3.3%, which triggered liquidations of leveraged derivatives positions worth more than $1.1 billion: over $400 million in ETH positions and $265 million in BTC positions were closed.
Later today at 14:30 (GMT+2), the August Personal Consumption Expenditures (PCE) Price Index will be released. Expectations are for the figure to rise from 2.6% to 2.7%, increasing the likelihood of borrowing costs being maintained until year-end, which could place additional pressure on the cryptocurrency sector.
The outlook for the digital asset market remains challenging: next week, most assets could either continue their decline or shift into consolidation.