Bitcoin
Crypto Wash Sends Bitcoin Below $58,000 Ahead of Fed Decision
By Amanda Cooper
LONDON (Reuters) – Bitcoin fell nearly 6% on Wednesday, posting its worst monthly April performance since late 2022, as investors pulled money out of cryptocurrencies ahead of a later Federal Reserve interest rate decision .
The value of the world’s most traded cryptocurrency fell nearly 16% in April as investors booked profits in a sizzling rally that sent the price to record highs above $70,000.
Bitcoin fell as much as 5.6%, reaching its lowest level since late February. The latest drop was 4.8% to $57,001, while losses in Ether were more modest, down 3.6% to $2,857, also the weakest level since February.
The price of bitcoin is now 22% below its March record high of $73,803, technically putting it in a bear market. But it’s still up 35% this year and double last year’s figure, thanks in large part to the billions of dollars that have flowed into newly issued exchange-traded funds since January.
“The recent downtrend can be attributed to increased profit-taking by investors who entered the market during the 2022 and 2023 recessions, as well as ETF investors who witnessed significant appreciation in their share prices after entering the market in the first weeks of 2024,” said Matteo Greco, research analyst at Fineqia.
Crypto-related stocks fell in US pre-market trading. Shares of crypto exchange Coinbase fell 4.6%, while miners Riot and Marathon Digital fell 4.2-4.3%.
On the macro front, the Federal Open Market Committee (FOMC) is not expected to make any changes to interest rates, but the view is taking root among investors that the central bank may not cut rates this year, delivering a blow to interest rates. rate-sensitive assets such as cryptocurrencies, emerging market stocks and bonds, or even commodities.
Investors responded accordingly. The 10 largest US spot bitcoin ETFs are facing their biggest weekly outflow since their inception in January.
Outflows reached $496 million this week, mainly as flows into BlackRock’s iShares Bitcoin Trust, the largest in terms of holdings, slowed, according to LSEG data.
Even smaller alt-coins, which can sometimes benefit from the weakness of the two big tokens, were punished. Data from crypto website Coingecko shows that Solana’s sol token has lost nearly a quarter of its value over the past seven days, as have the meme coins dogecoin and shiba inu – both popularized in 2021 in part by Tesla owner Elon Musk.
Bitcoin’s so-called “halving event” last month did little to support the price. Since April 20, when the halving took place, bitcoin has fallen by around 15%. Many investors entered the market ahead of the event, which involves a change in the cryptocurrency’s underlying technology designed to slow the rate at which new bitcoins are created.
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From a chart perspective, Alex Kuptsikevich, senior market analyst at the FXPro platform, said that bitcoin’s decline is entering a new phase.
Not only is May a month of seasonal weakness for bitcoin, but the price drop in recent weeks brings $55,700 and $51,000-52,000 into focus, he said.
“However, both the FOMC announcements later today and the monthly employment data on Friday have enough potential to accelerate or reverse the downtrend,” he said.
(Reporting by Amanda Cooper, additional reporting by Samuel Indyk; Editing by Stefano Rebaudo, Ros Russell and Louise Heavens)