The cryptocurrency Bitcoin (BTC) saw a significant drop on Wednesday, falling to its lowest level in over two months as broader market sentiment turned cautious ahead of the U.S. Federal Reserve’s interest rate decision. Bitcoin declined by as much as 7% to $56,526.00, its lowest level since February 27, according to CoinMetrics, before recovering slightly to $57,413.94, down by about 4%. Investors are closely watching the Federal Reserve’s upcoming interest rate decision following its two-day policy meeting.
Market volatility has increased recently, with concerns about the potential delay in interest rate cuts. Investors are eager to hear from Fed Chair Jerome Powell about the conditions necessary for rate cuts. Bitcoin, often considered a hedge against inflation, has shown mixed results in that regard. Standard Chartered’s head of digital asset research, Geoff Kendrick, noted that Bitcoin dropping below $60,000 could lead to a further decline to the $50-52k range. Factors affecting Bitcoin’s performance include consecutive outflows from U.S. spot Bitcoin exchange-traded funds, a challenging macroeconomic environment, and decreasing market liquidity.
The launch of spot Bitcoin ETFs in Hong Kong this week received a lackluster response, with low first-day turnover volumes despite solid net asset positions. Kendrick emphasized that while liquidity is important, the current strong U.S. inflation data and reduced chances of Fed rate cuts are the primary concerns. Additionally, the cryptocurrency market faced downward pressure following news of former Binance CEO Changpeng Zhao’s four-month prison sentence for money laundering charges.
Bitcoin, the cryptocurrency, experienced a drop to its lowest level in over two months on Wednesday, falling as much as 7% to $56,526.00. This downward trend was attributed to broader risk-off sentiment in markets, as investors awaited the U.S. Federal Reserve’s interest rate decision following a two-day policy meeting. Some observers believe that Bitcoin’s recent drop below $60,000 could lead to a further decline towards the $50-52k range. Factors impacting the token included consecutive outflows from U.S. spot bitcoin exchange-traded funds, a deteriorating macro backdrop, and poor liquidity in the market. This decline in Bitcoin’s price also coincided with news of the former CEO of Binance being sentenced to four months in prison for money laundering charges.
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