Bitcoin took a hit on Tuesday as investors are anxiously awaiting the release of the consumer price index data and the outcome of the Federal Reserve policy meeting on Wednesday.
The leading cryptocurrency, Bitcoin (BTC USD), dropped by 4% to approximately $66,842, according to Dow Jones Market Data. Despite a 59% rise so far this year, Bitcoin remains over 9% below its all-time high of $73,798, achieved in March.
In addition, bitcoin exchange-traded funds (ETFs) experienced a significant outflow of $65 million on Monday, marking the first daily outflow since May 9, according to Farside Investors and FactSet data. The excitement around Spot Bitcoin ETFs seems to be waning. Blackrock ETF experienced outflows for the first time since it began trading in January, with nearly $36.9 million exiting the fund. This indicates that even institutional investors are not immune to market sentiments.
But it seems the decline in Bitcoin’s value can be largely attributed to a general risk-off sentiment among investors reacting to macroeconomic data, as noted by analysts at crypto-trading firm QCP Capital. On Tuesday, U.S. stocks also saw a downturn, with the Dow Jones Industrial Average (DJIA) falling by 176 points, or 0.5%, to around 38,692, and the S&P 500 (SPX) dropping by 0.2%. Meanwhile, the Nasdaq Composite (COMP) managed a slight increase of 0.2%.
Investors are still processing last week’s unexpectedly strong May jobs report. This has led Fed-fund-futures traders to revise their expectations for rate cuts later this year. According to the CME FedWatch Tool, there is now a 37% chance of the equivalent of two quarter-point cuts and a 38% chance of one cut by the end of the year.
All eyes are on the consumer price index data due Wednesday, which could influence the Federal Reserve’s interest rate decisions. While the Fed is expected to maintain its current interest rate this week, investors will be closely monitoring the dot-plot forecast and Fed Chair Jerome Powell’s press conference.
A robust U.S. dollar has been putting pressure on Bitcoin, with the ICE U.S. Dollar Index (DXY), which measures the dollar against a basket of six major currencies, rising 0.3% on Tuesday to around 105.4, according to Dow Jones Market Data.
The anticipation of the U.S. Securities and Exchange Commission’s (SEC) final decision on spot ether ETFs also contributed to the dip in Bitcoin. Although the SEC approved the ETFs, there has been no significant change in Bitcoin prices. In the last 24 hours, Bitcoin’s price has ranged between $68,183 and $69,506.
Bitcoin’s value has declined around 19.59% from its all time peak of $73,750 in March, briefly even dipping below $60,000 in the first week of the month, but recovering past $70.000 last week. The markets are currently grappling with regulatory scrutiny, as the SEC is also intensifying its actions against major players in the crypto world like Consensys.
As the market continues to navigate these challenges, the performance of Bitcoin will be closely watched by investors seeking signs of stability in the volatile cryptocurrency landscape.
