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Fall Back Below $69,000 As Dollar Resilience Limits Gains By Investing.com
Investing.com– The price slipped on Wednesday after the U.S. dollar showed strength. Additionally, recent data indicating slowing capital flows into cryptocurrencies suggests growing caution among investors about the market.
Bitcoin fell nearly 2% to $68,662.6 at 1:59 pm ET (5:59 pm GMT) on Wednesday. It had previously risen well above the $71,000 mark before retreating.
Bitcoin price limited by strong dollar, further rate signals awaited
The greenback’s strength limited any further gains for Bitcoin, as traders remained largely dollar-oriented ahead of further U.S. interest rate signals. It remained within sight of a one-month high on Wednesday.
Recent dovish signals from the Swiss National Bank and the Bank of England have traders largely favoring the greenback as the only high-yield, low-risk currency, at least until the Federal Reserve starts cutting interest rates.
Data from the PCE price index, the Fed’s preferred inflation indicator, is set to offer further signals on this front later this week. Any signs of sticky inflation could impact a more hawkish outlook for the Fed, presenting potential delays in its plans to begin cutting interest rates.
Top Fed officials Chair Jerome Powell and FOMC member Mary Daly are also expected to speak later this week, potentially offering further guidance on interest rates.
The prospect of higher US interest rates, at least in the meantime, has seen traders prefer safer dollar trades over Bitcoin, especially given that the cryptocurrency tends to come under pressure from a high rate environment. Rising interest rates through 2022 resulted in steep losses in Bitcoin, with the token falling to lows of around $15,000 at the end of 2022.
Since then, the world’s largest cryptocurrency has staged a nearly five-fold recovery from 2022 lows, and recently posted record highs of more than $73,000. Much of Bitcoin’s recent gains have been driven by the US approval of Exchange Traded Funds that directly track the price of the token.
But recent data from digital asset manager CoinShares showed that capital flows into Bitcoin ETFs have slowed in recent weeks, while sustained outflows from the Grayscale Bitcoin Trust (BTC) ETF (NYSE:GBTC) have put some pressure on sale on the token.
Bitcoin ETFs have seen a stellar seven weeks of exceptional inflows, as the recent approval of spot ETFs drove traders into the token in droves. But these inflows have slowed in the past week, especially as investor sentiment has become more unstable amid uncertainty over US interest rates.
A Hong Kong asset management firm applies to launch a spot Bitcoin ETF
Elsewhere, asset management firm VSFG, in partnership with Value Partners, has submitted an application for a spot bitcoin ETF to the Securities and Futures Commission (SFC) in Hong Kong
This move follows a Bloomberg report indicating that the SFC may soon allow in-kind creations and redemptions for such ETFs in the next quarter.
Following the US approval of bitcoin spot ETFs in December 2023, Hong Kong regulators also opened the door to cryptocurrency spot ETF applications.
Earlier this year, Harvest Global Investments, a leading asset manager in China, reportedly filed its first application for a spot bitcoin ETF with the SFC.
According to local reports, up to 10 financial institutions are preparing to apply to launch bitcoin ETFs in Hong Kong.
Three decentralized AI companies will merge tokens
In other cryptocurrency developments, Fetch.ai, SingularityNET, and Ocean Protocol are joining forces in an effort to merge their tokens and form an alliance dedicated to decentralized artificial intelligence (AI).
Announced via email Wednesday, their goal is to create an AI collective that serves as a decentralized counterpoint to the dominant models overseen by big tech companies.
The collaboration will see Fetch.ai’s token (FET) transform into ASI – “artificial super intelligence” – with an initial total supply of approximately 2.63 billion tokens and a starting price of $2.82. Tokens from SingularityNET (AGIX) and Ocean Protocol (OCEAN) will join the ASI, converging at rates around 0.433 to 1, targeting a fully diluted market capitalization of around $7.5 billion.
This alliance aims to create a decentralized and accessible AI framework, in contrast to existing systems controlled by tech giants.
The initiative comes amid growing interest in AI technologies, such as ChatGPT, and growing concerns about the potential of some large companies, including Microsoft (NASDAQ:), Alphabet (NASDAQ:), Amazon (NASDAQ:), Apple ( NASDAQ:), and Meta (NASDAQ:), to monopolize the sector.
These concerns have pushed blockchain and Web3 companies to develop their own projects and attempt to introduce an alternative vision for artificial intelligence, focusing more on transparency and common data sharing.
[Ambar Warrick contributed to this article]