In a notable shift, Bitcoin prices fell below $90,600 for the first time in 24 days, marking a significant downturn in the cryptocurrency sector. This decline contributed to a broader market slump, with the overall cryptocurrency market capitalization plummeting by over $148 billion on Monday. Amidst this backdrop, traders are closely monitoring the upcoming US Consumer Price Index (CPI) report, which could further influence market dynamics.
The cryptocurrency downturn coincides with fluctuations in other markets. Gold prices displayed resilience during the Asian session on Tuesday, attracting some dip-buyers after reversing the previous day's retracement from a one-month top. Meanwhile, market expectations regarding the Federal Reserve's monetary policy have created a headwind for the Australian Dollar (Aussie), compounded by the Reserve Bank of Australia's (RBA) dovish stance and ongoing economic challenges in China. Geopolitical risks further weigh on the Aussie, adding to its current headwinds.
In currency markets, the USD/JPY remained near a one-week low reached the prior day. The US Dollar experienced pressure following reports that advisors to former President Trump's incoming economic team were contemplating a gradual implementation of tariffs. These reports triggered a pullback in US bond yields, keeping USD bulls on the defensive. As a result, the XAU/USD pair benefited from this pullback, providing some support to gold prices.
The cryptocurrency sector's 5% plunge on Monday has underscored market volatility amidst mounting anticipation of the US CPI report. Traders are navigating through these fluctuations, with an eye on potential policy shifts and their impact on various asset classes.