Why is the Bitcoin Price Falling: Global Data is Worrying Investors!
The Bitcoin price experienced a decline throughout the week, signaling certain trends in the crypto market. As BTC fell to around $57,500, its market value also hovered around $1.13 trillion.
In the weekly chart, the Bitcoin price continued its double-digit losses. Investors are now expecting a decline towards $50,000. The performance in April already includes a significant drop of around 16%, indicating a bleak overall picture.
Some investors are closely monitoring Bitcoin movements to gauge changes in liquidity dynamics that could affect other assets. BTC experienced a decline in recent weeks due to signals from the Federal Reserve indicating that interest rates will remain high for an extended period. This stance tightened financial conditions by increasing Treasury yields and strengthening the value of the dollar.
In its latest decision, the FOMC chose to keep U.S. interest rates in the range of 5.25% to 5.50% since July 2023. Many were expecting a rate cut from the Fed on May 1st, which could have benefited stock market valuations and thus cryptocurrencies.
However, Jerome Powell stated that the Fed intends to keep interest rates steady until inflation falls back to the 2% target level. In a note to investors, Charlie Morris, Chief Investment Officer at ByteTree Asset Management, wrote the following.
“Bitcoin is our favorite canary. It warns of potential issues in financial markets, but we can be sure it will bounce back at some point. The recent strengthening of the U.S. dollar may indicate tightening in the market.”
The launch of spot Bitcoin and Ethereum ETFs in Hong Kong generated some excitement. However, the trend in the U.S. market has largely been downward. On Wednesday, U.S. spot BTC ETFs saw significant outflows totaling $560 million. BlackRock’s IBIT witnessed outflows for the first time since its inception, indicating a decrease in interest in ETFs.
