Bitcoin has dropped by 4,7% today, from a high of $71,231 on yesterday. It is currently hovering near $66,967. This drop marks the return of market volatility due to several factors.
Expectations for the FOMC meeting of the Federal Reserve
Bitcoin’s market is in a “risk-off” mode, ahead of the tomorrow’s Federal Open Market Committee (FOMC) meeting on Wednesday, June 12th. The market’s sensitivity to macroeconomic indicators is on full display as stakeholders await the US Federal Reserve’s decision on interest rates and its economic projections.
The market expects the Fed to maintain interest rates in a band of 5.25-5.50 percent, however the dot plot will be updated and projected to take a more aggressive stance. It is expected that in 2024, the Fed will reduce the number of rate cuts from three down to two. However, some are speculating on the possibility of just one. The hawkish tilt of monetary policy is likely to have a significant impact on investor behavior, since higher interest rates tend to dampen the appeal for non-yielding investments like cryptocurrency.
The May 2024 date adds to the unpredictability. US Consumer Price Index (CPI) Just hours before FOMC announces its decision, data will be made public. Markets have reacted heavily to US macroeconomic reports in the past few months. Any deviation from expected results could cause significant price movements.
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Crypto analyst Ted commented On X: X is a critical look at this week’s events. “After last Friday’s strong employment data, markets have almost completely priced out a July rate cut. Powell could quickly change this on Wednesday, especially if CPI comes in soft. There’s an (off) chance for significant repricing this week, which could move BTC + crypto…”
#1 Intensified Selling Pressure
It appears that spot-selling is the primary cause for recent price declines. Analysis from alpha dōjō reveals This heavy selling pressure is largely to blame for the decline down to a minimum of $67,000. The dynamics of the market during this time indicate that there has been a shift in direction, as an increase in sell orders was not matched by enough buy orders to maintain price levels. Due to this imbalance, a previously strong zone of support around $68,000 has been breached.
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Analysts elaborated the current situation. “Volatility has made a comeback, with BTC dropping as much as 3.5% to a low of $67k since yesterday. This selloff was primarily driven by heavy spot selling pressure, which is quite negative. A major concern is the lack of liquidations while the selloff is happening. BTC is currently in a critical area; the daily structure has been broken. BTC needs to bounce here, or it’s very likely we’ll fall back to the lower $60ks.”
Three-day streak of Bitcoin ETF inflows ending
Spot Bitcoin ETFs also reflect the current bearish trend in the markets. The funds have experienced significant outflows after 19 consecutive positive days. outflows Total outflows of $64.9 millions yesterday. Grayscale Bitcoin Trust is notable, as it experienced an outflow of $39.5 millions. BlackRock, on the other hand, saw a smaller inflow of $6.3million.
Performance of ETFs from other providers varied widely. Fidelity registered outflows in the amount of $3 million. Bitwise, on the other hand, recorded an inflow of $7.6million. In contrast, Invesco reported an outflow of $20 million and Valkyrie reported an outflow totalling $15.8 millions.
BTC was trading at $66,967 as of the time this article went to press.
Featured image created with DALL·E, chart from TradingView.com
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Source: www.newsbtc.com
