Bitcoin prices retreated today, falling to their lowest point in nearly a month, as the dots combined to fuel their latest declines.
The world’s maximum virtual currency fell to $65,005 this afternoon, according to Coinbase’s knowledge of TradingView. At this point, the cryptocurrency had been trading since at least mid-May or so.
When asked about these latest price advances, analysts pointed to several factors, ranging from recent decisions by the Federal Open Market Committee to advances in futures markets.
The FOMC might have made a mistake earlier this week by opting to leave the target diversity for the federal budget rate unchanged and project that it would cut that rate only once in 2024, according to a market observer.
“There is a strong emerging narrative that ‘the Fed just made a policy mistake,’ as it kept rates at recent highs on Wednesday and lowered its forecast for cuts for the rest of the year, just as a number of signs of inflation and economic expansion were coming to light,” Seth Ginns said, managing spouse and head of liquid investments at CoinFund, in emailed comments.
Independent analyst Armando Aguilar weighed in on this topic and explained how it affects sentiment around Bitcoin and the broader virtual currency markets.
“The Federal Reserve’s leaving rates unchanged between 5. 25% and 5. 50% and expecting fewer rate cuts this year has dampened hopes that BTC will emerge to new ATH levels,” he said in an email.
“Instead, heightened fears of higher interest rates have helped capital flows into crypto investment products,” Aguilar added.
“By going from three rate cuts to one, investors have ignored expectations about expected rate cuts weighing on assets like crypto. “
Ginns explained how the Fed’s recent decisions may have an effect on genuine yields, which are inflation-adjusted returns.
“So if the Federal Reserve helps keep rates going and inflation slows, then genuine returns go unnoticed, which is bad for Bitcoin,” Ginns noted.
“The Federal Reserve has made it clear that it does not want real yields to rise, so we expect it to be more dovish in its public appearances in the coming weeks if we see continued data on lower inflation. “
Several analysts have commented on how adjustments in futures positions have affected Bitcoin and crypto markets in general.
However, “a few days ago, costs fell due to profit-taking, and then an influx of new short positions drove today’s decline. “
Greg Magadini, head of derivatives at virtual asset knowledge provider Amberknowledge, also presented his opinion on the matter.
“After the positive sentiment in the ETH ETF, we saw a sharp increase in crypto futures open interest, however, since then, the macroeconomic environment has become more hawkish due to strong employment and the recent FOMC rate resolution and press conference,” he said via email.
“The market now expects only a rate cut in 2024. This, combined with the realization that recent Bitcoin ETF inflows may simply be due to ‘basic trading’ and not direct Bitcoin investments, we are seeing headwinds for higher prices,” Magadini said. . .
He clarified, stating via Telegram that “the macroeconomic environment has become aggressive and people who bought futures under the SEC ETF resolution are now insured as sellers. “
“Furthermore, inflows into the BTC ETF are not as directly bullish as initially thought, as it appears that a large portion of those inflows are related to short-term futures contracts on the CME,” Magadini added.
Disclosure: I Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS, and SOL.
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