The past week has seen a significant decline in the price of Bitcoin, falling 2.4% in the past 24 hours to $62,850.7. This downward trend can be attributed to concerns over U.S. interest rates and anticipation of key inflation data, which has kept traders biased towards the dollar. The strong dollar, nearing a two-month high, has put pressure on broader cryptocurrency prices, including Bitcoin.
While Bitcoin has experienced losses, major altcoins have seen even deeper declines in prices. Token unlocks, dwindling institutional demand, and profit-taking have all contributed to the downward pressure on cryptocurrency prices. Institutional demand for crypto investment products, which was previously centered around Bitcoin, has also shown signs of weakening.
Market Reaction
World no.2 token Ether fell 4.2% to $3,366.81, reaching a one-month low as it consolidates gains made on hype over a spot Ether exchange-traded fund. Other major altcoins such as XRP, ADA, and SOL have also experienced significant losses, with some tokens like DOGE and SHIB falling as much as 5.8%.
The upcoming key PCE price index data due this Friday is expected to show some mild cooling in inflation, but will likely remain well above the Fed’s 2% annual target. This gives the central bank more room to keep interest rates high, which could negatively impact the appeal of speculative, risk-driven assets like cryptocurrencies. The uncertainty surrounding the timing of interest rate cuts by the Federal Reserve is likely to keep traders cautious in the coming weeks.
The recent decline in cryptocurrency prices, particularly Bitcoin, can be attributed to concerns over U.S. interest rates and anticipation of key inflation data. The strong dollar and potential high interest rates pose a challenge for the crypto market, as they diminish the appeal of risk-driven assets. Traders will likely continue to monitor the Fed’s outlook on interest rates and inflation data to gauge the future direction of cryptocurrency prices.