Bitcoin drops below $58,000 ahead of Fed rate decision
written by Bella Palmer
Bitcoin was last down 4.7% to $57,055, its lowest since late February, while losses in ether were more modest, down 3.6% at $2,857, also at its weakest since February
Bitcoin dropped for a third day on Wednesday, having posted its worst monthly performance in April since late 2022, as investors pulled money out of crypto currencies ahead of an interest rate decision by the U.S. Fed later.
The value of the world's biggest crypto currency dropped by around 16% in April, as investors booked profits on a strong rally that has taken the price to record highs above $70,000.
Bitcoin was last down 4.7% to $57,055, its lowest since late February, while losses in ether were more modest, down 3.6% at $2,857, also at its weakest since February.
The price of bitcoin is now 22% below March's record of $73,803, technically putting it in a bear market. But it is still 35% higher so far this year and double where it was this time last year, thanks in large part to the billions of dollars flowing into newly minted ETFs since January.
The recent downtrend can be attributed to higher profit-taking by investors who entered the market during the downturns of 2022 and 2023, as well as exchange traded fund investors who witnessed significant price appreciation on their shares after entering the market in the early weeks of 2024, according to Fineqia research analyst Matteo Greco.
On the macro front, the Federal Reserve is not expected to make any changes to interest rates later, but the view is taking root among investors that the central bank may not reduce rates at all this year, delivering a blow to interest rate-sensitive assets like crypto currencies, emerging market stocks and bonds or even commodities.
Investors have responded accordingly. The 10 biggest U.S. spot bitcoin exchange-traded funds are facing their biggest weekly outflow since their inception in January.
Outflows are up to $496 million this week, mostly as flows into BlackRock's iShares Bitcoin Trust, the biggest in terms of holdings, have slowed, as per LSEG data.
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