Bitcoin Price Drops Again on Waning Demand for US ETF, Reduced Bets on Fed Easing Summary Bitcoin prices have fallen again amid cooling demand for a dedicated US exchange-traded fund (ETF) and reduced bets on monetary policy easing by the Federal Reserve. The robust rally in cryptocurrencies this year is losing steam as persistent US price pressures prompt investors to pare back bets on Fed rate cuts, buoying Treasury yields and the US dollar
Bitcoin Price Drops Again on Waning Demand for US ETF, Reduced Bets on Fed Easing
Summary
Bitcoin prices have fallen again amid cooling demand for a dedicated US exchange-traded fund (ETF) and reduced bets on monetary policy easing by the Federal Reserve. The robust rally in cryptocurrencies this year is losing steam as persistent US price pressures prompt investors to pare back bets on Fed rate cuts, buoying Treasury yields and the US dollar. Crypto markets have looked "soft" in the last 12 hours, following the latest US economic data, said Richard Galvin, co-founder of DACM.
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Bitcoin has been on a rollercoaster ride since hitting record highs in 2021. However, in recent weeks, bitcoin prices have started to pull back significantly, amid cooling demand for a dedicated Bitcoin ETF in the United States and reduced bets on a dovish pivot by the Federal Reserve.
The US Securities and Exchange Commission (SEC) has yet to approve a bitcoin ETF, which has led to concerns among market participants about the long-term viability of the asset class. Additionally, recent hawkish commentary from the Fed, and concerns about persistently high inflation, have also dampened investor enthusiasm for cryptocurrencies.
Market analyst Richard Galvin noted that crypto markets have been "soft" in the last 12 hours, following the latest US economic data. This weakness reflects concerns about the US economic growth outlook and expectations that the Fed will have to adopt a more hawkish stance to tame inflation.
Rising US Treasury yields have also been a headwind for bitcoin prices. Treasury yields have been climbing as investors prepare for higher US interest rates. This has led to a stronger US dollar, which tends to have a negative impact on cryptocurrency prices.
In addition to macroeconomic factors, bitcoin prices are also being influenced by technical factors. Bitcoin recently broke below a key support level of $40,000, which could trigger further selling.
Outlook
The future direction of bitcoin prices remains uncertain. However, if the Fed adopts a more hawkish stance, the US dollar continues to strengthen, and demand for an ETF remains weak, bitcoin prices could fall further. On the other hand, if inflation concerns ease and the Fed becomes more dovish, bitcoin prices could rebound.
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