Blockchain
Cryptocurrency Failure Sends Bitcoin Below $58,000 Ahead of Fed Decision
By Amanda Cooper
LONDON (Reuters) – Bitcoin slipped nearly 6% on Wednesday, after posting its worst monthly performance in April since late 2022, as investors pulled money out of cryptocurrencies ahead of a subsequent interest rate decision from the Federal Reserve. Reserve.
The value of the world’s most traded cryptocurrency plunged nearly 16% in April as investors booked profits on a wild rally that took the price to record levels above $70,000.
Bitcoin fell 5.6%, hitting its lowest since late February. The latest decline was 4.8% to $57,001, while ether’s losses were more modest, down 3.6% to $2,857, also at its lowest since February.
The price of bitcoin is now 22% below its March record of $73,803, technically putting it in a bear market. But it’s still up 35% this year and double from the same period last year, thanks largely to the billions of dollars flowing into new exchange-traded funds since January.
“The recent downward trend can be attributed to increased profit-taking by investors who entered the market during the 2022 and 2023 recessions, as well as ETF investors who saw significant appreciation in the price of their shares after entering the market in the first weeks of 2024,” said Matteo Greco, research analyst at Fineqia.
Cryptocurrency-related stocks tumbled in US pre-market trading. Shares of cryptocurrency exchange Coinbase fell 4.6%, while those of miners Riot and Marathon Digital fell 4.2-4.3%.
On the macro front, the Federal Open Market Committee (FOMC) is not expected to make any changes to interest rates, but there is growing sentiment among investors that the central bank may not cut rates at all this year, giving a severe blow to interests. rate-sensitive assets such as cryptocurrencies, emerging market stocks and bonds or even commodities.
Investors responded accordingly. The 10 largest bitcoin spot ETFs in the United States are facing their largest weekly outflow since their launch in January.
Outflows reached $496 million this week, largely because flows into BlackRock’s iShares Bitcoin Trust, the largest by holdings, slowed, according to LSEG data.
Even smaller alt-coins, which can sometimes take advantage of the weakness of the two larger tokens, have been punished. Data from cryptocurrency website Coingecko shows Solana’s sol token has lost nearly a quarter of its value over the past seven days, as have meme coins dogecoin and shiba inu, both popularized in 2021 in part by Tesla owner Elon Musk.
Bitcoin’s so-called “halving event” last month did little to support the price. Since April 20, the day the halving occurred, bitcoin has fallen by around 15%. Many investors have been buying into the market in the run-up to the event, which involves a change to the cryptocurrency’s underlying technology designed to reduce the rate at which new bitcoins are created.
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On the chart side, Alex Kuptsikevich, senior market analyst for the FXPro platform, said that bitcoin’s decline is entering a new phase.
Not only is May a month of seasonal weakness for bitcoin, but the price decline in recent weeks has also brought $55,700 and $51,000-$52,000 into focus, he said.
“However, both the FOMC announcements later today and Friday’s monthly jobs data have enough potential to accelerate or reverse the downtrend,” he said.
(Reporting by Amanda Cooper, additional reporting by Samuel Indyk; Editing by Stefano Rebaudo, Ros Russell and Louise Heavens)