Declining demand for US-based exchange-traded funds and waning hopes for a softer monetary policy from the Federal Reserve caused Bitcoin's price to plummet.
At 7:15 a.m. London time on Tuesday, the digital asset was trading at $66,920, having fallen as high as 5.3% before retracing some of the loss. Pepe and dogwifhat, two tokens formerly popular among memeters, also fell, sending a barometer of smaller digital assets on their worst two-day decline in over two weeks.
As investors lower their bets on the Federal Reserve cutting interest rates due to persistent price pressures in the US, the high crypto rise that started this year is fading, which is good news for Treasury yields and the dollar. Speculative areas of global markets, like the digital asset sector, face a more challenging backdrop in this context.
"Across crypto, where there has been a selloff as the week gets underway — no sector is unaffected, especially those where prices have outperformed Bitcoin over last six months, for example memes," declared Stefan von Haenisch, head of trading at OSL SG Pte, in response to the altered perceptions of the Federal Reserve.
Since mid-March, when it peaked at $73,798 per coin, Bitcoin has lost around 10% of its value. The biggest digital asset is now feeling the effects of a daily influx of less capital into US spot-Bitcoin ETFs. Bloomberg reports that since the batch of ten products went live on January 11th, they had garnered approximately $12 billion, with investors withdrawing a net of $86 million on Monday.
In response to the most recent US economic data, crypto market co-founder Richard Galvin described it as "weak" during the previous 12 hours.
The data revealed that input prices increased and that manufacturing in the US unexpectedly expanded for the first time since September 2022. In the aftermath of the report, the amount of Fed easing anticipated in this year's swap contracts dropped to approximately 65 basis points, which is lower than what officials had anticipated.
As a four-yearly occurrence, some traders see the halving of the quantity of new Bitcoin coins this month as a prop for the cryptocurrency. The token's value has quadrupled since the beginning of 2023, leading some to believe that additional gains will be difficult to achieve.
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