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falls below $61,000 due to dollar pressure and unfavorable rates. From Investing.com
Investing.com’s price fell on Wednesday, remaining within a trading range established over the past month, as risk appetite remained fragile amid higher U.S. interest rates for a longer period.
The dollar’s strength has put pressure on cryptocurrency markets in recent sessions, especially as strong U.S. inflation and retail sales data have given the Federal Reserve little impetus to start cutting interest rates. This notion was also reiterated by Chairman 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 drove the dollar to more than five-month highs.
Bitcoin fell 3.7% over the past 24 hours to $60,974.9 as of 1:52 pm ET (18:52 GMT). The token has remained at a low between $60,000 and $70,000 for a month, after hitting a record high above $73,000 in March.
Powell advocates higher interest rates for longer periods
Fed Chair Jerome Powell said Tuesday that sticky inflation gave the Fed little confidence to start cutting interest rates.
His comments saw traders further scale back expectations of an interest rate cut in June. According to the CME’s Fedwatch tool, markets now see less than an 18% chance for a 25 basis point cut in June and a nearly 80% chance that the Fed will keep rates stable. The bets mark a sharp reversal from previous expectations for a June cut.
Higher rates for a longer period do not bode well for cryptocurrency markets, as the sector usually thrives in a low-rate, high-liquidity environment.
Bitcoin’s halving is imminent, but Goldman analysts advise against reading past cycles
Attention has now turned to the upcoming halving event, which is expected to take place in the next few 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 token’s scarcity will increase its value.
Traders expect the halving to spur some gains in Bitcoin, although past halvings have typically led to limited short-term gains.
Analysts at Goldman Sachs have advised their clients to be wary of relying too much 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 takes to reach all-time highs differs significantly,” they wrote.
“Caution should be exercised in extrapolating past cycles and the impact of the halving, given the respective prevailing macroeconomic conditions,” the Goldman team wrote in a recent note to clients.
In other words, for historical trends to repeat themselves, favorable macroeconomic conditions to encourage risk taking are essential.
Currently, this is not the situation as US interest rates exceed 5% and recent market behavior reflects lower expectations for rate cuts this year, due to persistent inflation and a robust economy.
Cryptocurrency Price Today: Altcoins Gain, But Mood Remains Gloomy
Broader cryptocurrency prices also fell on Wednesday, with the No. 2 in the world down 3.1% to 2,988.07 dollars.
and decreased by 2.2% and 2% respectively.
All three tokens were bearing recent losses, especially in the face of higher US interest rates for a longer period.
Risk appetite was also fragile due to persistent fears of worsening geopolitical tensions between Iran and Israel.