📉 Why is Bitcoin Falling? The Fed's Impact Revealed! 📉
Bitcoin's recent decline can be attributed to several key factors, notably the anticipated interest rate decision by the Federal Reserve and statements from Fed Chairman Powell. There's considerable market anxiety surrounding Powell's forthcoming statements following today's decision.
Additionally, the decrease in investments in ETFs has contributed to the downturn in cryptocurrencies, particularly Bitcoin. Over the past week, all Bitcoin ETFs have closed each day in the red, with a net investment outflow of over $500 million from ETFs in just a few days.
Matteo Greco, a research analyst at Fineqia, explained to Reuters, “The recent downward trend can be attributed to increased profit-taking by investors who entered the market during the 2022 and 2023 crises, as well as by ETF investors who saw a significant price increase in their shares after entering the market in the first weeks of 2024.”
From a macro perspective, although the Fed isn't expected to change interest rates, investor sentiment suggests the central bank may not cut interest rates at all this year. This perception could negatively impact interest rate-sensitive assets such as cryptocurrencies, emerging market stocks and bonds, and commodities.
Furthermore, there's concern among traders that the Fed may maintain high interest rates for an extended period, potentially triggering significant movements in the stock market.
The Federal Reserve's interest rate decision will be announced at 21:00 this evening, followed by Powell's press conference at 21:30.
