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The crypto market traded higher at press time, helped at least in part by traders scaling back expectations for a 100 basis point (1 percentage point) hike in borrowing costs by the U.S. Federal Reserve later this week.
In the lead were major decentralized finance (DeFi) coins, boasting double-digit percentage growth in 24 hours and outperforming market leaders bitcoin (BTC) and ether (ETH).
Cryptocurrency lending platform Aave's native coin, AAVE, was up 15% at $91. Last week, AAVE proposed a decentralized yield-generating dollar-pegged stablecoin GHO to expand services offered on the platform. GHO is likely to generate additional revenue for the Aave decentralized autonomous organization (DAO) by sending 100% of interest payments on GHO borrowing to the DAO, the proposal said.
Decentralized exchange (DEX) Uniswap's UNI traded at $7, representing a 13% gain. Bitcoin, the biggest cryptocurrency by market value, changed hands at $20,660, up 3.5%, while Ethereum's ether token was priced at $1,200, up 8%. Other notable gainers were programmable blockchain Solana's SOL cryptocurrency, privacy-focused coin monero, Polygon's MATIC, cosmos and algorand.
Rates traders saw a 49% chance that the Fed would deliver a full percentage point interest rate hike on July 27, a significant decline from 80% seen after the release of Wednesday's consumer price index (CPI), an indication of inflation or deflation, according to data tracked by the Chicago Mercantile Exchange's FedWatch tool.
The repricing of the probability lower began later Thursday after Federal Reserve Governor Christopher Waller said the "markets may have gotten ahead of themselves" in pricing in a 100 basis point rate hike for July.
However, Waller said he supports a 75 basis point rate hike later this month and may consider a bigger rate hike if the retail sales and housing data paint a positive picture of the economy.
Due Friday at 12:30 UTC, or 8:30 a.m. ET, the retail sales data is likely to show that consumer spending increased by 0.9% in June. The housing data due on July 19 could show housing starts tumbled 14.4% in May, while building permits dropped 7%.
DeFi outperformance a flash in the pan
Observers were unsure if the rally in the DeFi majors would be long-lasting, given the fundamentals remained weak.
"Sure, we see some rally in the DeFi coins for now, but fundamentally nothing has changed. The total value locked has been destroyed," crypto financial services firm Amber Group said, while noting the absence of large buying.
"We have seen some institutional mandates scooping up majors and DeFi blue chips, but it's not like massive amounts," Amber's trading desk told CoinDesk.