🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Bitcoin price today: slides below $63k as dollar pressure, rate headwinds persist

Published 17/04/2024, 06:50
© Reuters.

Investing.com-- Bitcoin price fell slightly on Wednesday, staying within a trading range established over the past month as risk sentiment remained fragile in the face of higher-for-longer U.S. interest rates.

Strength in the dollar pressured crypto markets in recent sessions, especially as strong U.S. inflation and retail sales data gave the Federal Reserve little impetus to begin cutting interest rates. This notion was also reiterated by Chair Jerome Powell on Tuesday.

Weak risk appetite, amid persistent geopolitical tensions in the Middle East, also kept traders largely on the sidelines, while safe-haven demand and rate expectations put the dollar at over five-month highs.

Bitcoin fell 0.6% in the past 24 hours to $62,703.1 by 08:03 ET (12:03 GMT). The token remained in a trough between $60,000 and $70,000 for a month after hitting a record high above $73,000 in March.

Powell touts higher-for-longer interest rates

Fed Chair Jerome Powell said on Tuesday that sticky inflation gave the Fed little confidence to begin cutting interest rates.

His comments saw traders further scale back expectations for an interest rate cut in June. Markets now see a less than 18% chance for a 25 basis point cut in June, and a nearly 80% chance that the Fed will keep rates steady, according to the CME Fedwatch tool. The bets mark a stark reversal from earlier expectations for a June cut.

Higher-for-longer rates bode poorly for crypto markets, given that the sector usually thrives in a low-rate, high-liquidity environment.

Bitcoin halving imminent but Goldman analysts advise against reading into past cycles

Focus was now on the upcoming halving event, which is expected to take place in the coming days with the generation of block no. 840,000 on the Bitcoin blockchain.

The event will halve the rate at which new Bitcoin is mined, and is expected to further the narrative that the scarcity of the token will increase its value.

Traders expect the halving to spur some gains in Bitcoin, although past halvings have usually resulted in limited near-term gains.

Analysts at Goldman Sachs (NYSE:GS) have advised their clients to be wary of relying too heavily on historical patterns from previous halving cycles.

"Historically, the previous three halvings have been accompanied by BTC price appreciation after the halving, although the time it took to reach the all-time highs differs significantly,” they wrote.

“Caution should be taken against extrapolating the past cycles and the impact of halving, given the respective prevailing macro conditions," Goldman's team wrote in a recent note to clients.

Put differently, for historical trends to reoccur, favorable macroeconomic conditions are essential for encouraging risk-taking.

Currently, this is not the situation as U.S. interest rates exceed 5%, and recent market behavior reflects diminished expectations for rate cuts this year, due to persistent inflation and a robust economy.

Crypto price today: altcoins gain, but mood remains dour

Broader cryptocurrency prices also dropped on Wednesday, with the world's no.2 token Ethereum down 1.6% at $3,047.88.

Solana and XRP fell 0.5% and 0.6%, respectively.

All three tokens were nursing recent losses, especially in the face of higher-for-longer U.S. interest rates.

Risk appetite was also fragile amid persistent fears of worsening geopolitical tensions between Iran and Israel.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.