The recent decline in Bitcoin price can be attributed to concerns over U.S. interest rates and anticipation of key inflation data. This has kept traders biased towards the dollar, leading to a 2.4% drop in Bitcoin’s value in the past 24 hours. The overall sentiment in the market is bearish as traders remain skeptical about the timing of interest rate cuts by the Federal Reserve.
The broader cryptocurrency market has also seen significant losses, with major altcoins experiencing deeper declines than Bitcoin. Factors such as token unlocks, dwindling institutional demand, and profit-taking have put pressure on prices. Recent capital flow data has shown that institutional demand for crypto investment products remains focused on Bitcoin, but even Bitcoin has seen heavy outflows in June.
World no.2 token Ether fell 4.2% to $3,366.81, hitting a one-month low. This can be attributed to a consolidation of gains made on hype over a spot Ether exchange-traded fund. Other tokens like XRP, ADA, SOL, DOGE, and SHIB also saw declines ranging from 3.3% to 7.4%. Despite some gains in recent sessions, these tokens have been strongly impacted by the overall bearish sentiment in the market.
High interest rates are unfavorable for cryptocurrencies as they diminish the appeal of speculative, risk-driven assets. The upcoming key PCE price index data is expected to show some mild cooling in inflation but is likely to remain above the Fed’s 2% annual target. This gives the central bank more room to keep interest rates high, which could further weigh on the crypto market.
As traders remain cautious about the impact of U.S. interest rates on the cryptocurrency market, it is likely that we will continue to see downward pressure on prices. The outcome of the key inflation data due this week will be closely watched by investors to assess the future direction of the market. In the meantime, it is important for traders to stay informed and monitor the developments in the broader financial markets to make informed investment decisions.