Understanding the Recent Decline in Bitcoin Price and Its Potential Continuation
As the cryptocurrency market faced a downturn, losing approximately $140 billion in value from $2.34 trillion to $2.20 trillion, concerns mounted among crypto enthusiasts. Over the past days, hefty million-dollar liquidations added to the woes, tallying an additional $470 million.
Bitcoin's price dipped to $57,000 on Wednesday, marking a 9% drop within 24 hours and a 13% decrease over a week. Simultaneously, the Crypto Fear and Greed Index slid from 67 (greed) to 54 (neutral) in a single day, reflecting growing apprehension among investors. Speculation looms about the potential further decline of BTC price to $47,000. What catalyzed this downturn?
Bitcoin and other crypto prices stumbled amidst escalating apprehensions regarding sustained high US interest rates, preceding the Federal Reserve's May 1 monetary policy decision. Investors were rattled by hawkish signals suggesting the Fed might maintain interest rates between 5.25% and 5.50%.
Earlier, Chairman Jerome Powell had hinted at the possibility of three interest rate cuts; however, indications now point to fewer cuts this year. The latest Personal Consumption Expenditures (PCE) data unveiled persistent inflationary pressures, while the first-quarter GDP growth of 1.6% signaled stagflation.
Prediction markets are currently foreseeing only one Fed interest rate cut this year, a sentiment largely dampening for cryptocurrency prices..$BTC
