The cryptocurrency market remains on edge ahead of the Federal Reserve’s upcoming FOMC meeting, with many traders focusing on potential clues about future monetary policy. While the Fed is widely expected to keep interest rates steady, the market is eager to hear more about the economic outlook and how it could affect financial markets.

Cardano’s ADA and XRP have both experienced notable declines, with ADA falling by 3.8% and XRP dropping 2.5% on Tuesday. These losses come as traders position themselves cautiously in the face of macroeconomic uncertainty. Meanwhile, Bitcoin (BTC) has shown resilience, staying above the $94,000 mark, with Ethereum (ETH) also seeing a minor decline of 1%.

The CoinDesk 20 index, which tracks the largest cryptocurrencies, dipped 1.8%, while other altcoins saw a mixed performance. Dogecoin (DOGE) lost 2% in the past 24 hours, further highlighting the cautious sentiment across the market.

Despite the downturn in major cryptocurrencies, there has been significant interest in decentralized finance (DeFi) tokens, which have seen a revival this week. Hyperliquid’s HYPE token led the charge, soaring by 72% in the last seven days, while AAVE and CRV also posted impressive gains, climbing by 35-40%.

“This resurgence in DeFi tokens indicates that investors are looking for stable and promising projects as market volatility continues,” said Kay Lu, CEO of HashKey Eco Labs. “Memecoins have cooled off, and traders are focusing more on long-term projects that offer real utility and growth potential.”

As DeFi tokens gain momentum, the market is closely watching the FOMC meeting, where the Federal Reserve’s decision on interest rates and any signals about future actions will be key to determining the direction of markets in the coming months.

Market Volatility and Fed Uncertainty

While Bitcoin’s volatility has remained relatively stable, the broader market is reflecting heightened uncertainty as traders await any signals from the Federal Reserve. The FOMC meeting is expected to be a pivotal event, with investors keen to hear if the Fed will maintain its cautious approach to monetary tightening or shift gears.

“The market is expecting a stable Fed decision, but the real action will be in Powell’s speech,” said Augustine Fan, Head of Insights at SignalPlus. “Cryptocurrency markets are likely to follow traditional financial markets, with any indications of rate cuts or changes in economic forecasts having a big impact.”

In addition to Fed policies, the ongoing tensions in U.S.-China trade relations remain a key point of concern. While there’s been no progress on a trade deal, separate agreements have provided some reassurance to the market.