Crypto
Bitcoin Falls 4% to $66,842 Ahead of CPI Report and Fed Meeting
Bitcoin falls 4% to $66,842 ahead of CPI report and Fed meeting, with $65 million ETF outflows.
Key Takeaway
- Bitcoin fell 4% to $66,842 ahead of CPI data and the Fed meeting, reflecting market risk-off sentiment.
- Bitcoin ETFs saw a $65 million outflow on Monday, their first since May 9.
- Investors are cautious as the Fed is expected to keep rates unchanged but may signal higher rates for longer.
Bitcoin's Recent Decline
Bitcoin experienced a notable decline on Tuesday, falling 4% to approximately $66,842, according to Dow Jones Market Data. This drop comes as investors await the release of the consumer-price-index (CPI) data and the Federal Reserve's policy meeting, both scheduled for Wednesday. Despite being up 59% year-to-date, Bitcoin is trading more than 9% below its all-time high of $73,798, reached in March. The decline is part of a broader market trend, with U.S. stocks also trading mostly lower. The Dow Jones Industrial Average fell 176 points, or 0.5%, to around 38,692, and the S&P 500 declined 0.2%, while the Nasdaq Composite edged up 0.2%.
ETF Outflows and Market Sentiment
Bitcoin exchange-traded funds (ETFs) saw a total outflow of $65 million on Monday, marking the first daily outflow since May 9, according to data from Farside Investors and FactSet. Analysts at crypto-trading firm QCP Capital attribute Bitcoin's recent weakness to a general risk-off sentiment in the market, driven by macroeconomic data. "If the Fed is seen reaffirming the need to keep rates higher for longer, this should keep [U.S. dollar] supported near-term, seeing [bitcoin] prices heading lower," wrote James Harte, an analyst at Tickmill Group. The ICE U.S. Dollar Index, which tracks the currency against a basket of six major rivals, was up 0.3% on Tuesday to around 105.4, further weighing on Bitcoin.
Liquidations and Altcoin Performance
The sudden pullback in Bitcoin triggered over $250 million in liquidations of leveraged derivatives trading positions across all crypto assets, according to CoinGlass data. This marks the second significant leverage flush in a week, following Friday's $400 million liquidations. Altcoins also saw deeper pullbacks, with the CoinDesk 20 Index declining over 6%. Ethereum's ether (ETH) fell below $3,500, down 6.5%, while solana (SOL), dogecoin (DOGE), Cardano's ADA, and Chainlink's LINK endured losses ranging from 6% to 9%. The broad-market decline highlights the heightened volatility and risk aversion among investors ahead of key economic data releases.
Street Views
QCP Capital (Bearish on Bitcoin):
"Bitcoin’s latest weakness could mostly be attributed to a general risk-off sentiment in the market in reaction to the macroeconomic data."
James Harte, Tickmill Group (Bearish on Bitcoin):
"If the Fed is seen reaffirming the need to keep rates higher for longer this should keep [U.S. dollar] supported near-term, seeing [bitcoin] prices heading lower."
