Tech
Crypto Crash Pushes Bitcoin Below $58K Ahead of Fed Decision
LONDON (Reuters) – Bitcoin fell nearly 6% on Wednesday, after posting its worst monthly performance in April since late 2022, as investors pulled money out of cryptocurrencies ahead of an interest rate decision by the Federal Reserve.
The value of the world’s most traded cryptocurrency fell nearly 16% in April, as investors booked profits on a surge that took the price to all-time highs above $70,000.
Bitcoin fell as much as 5.6% to its lowest since late February. It was last down 4.8% to $57,001, while ether’s losses were more modest, down 3.6% to $2,857, also its lowest since February.
Bitcoin’s price is now a full 22% below its March high of $73,803, technically putting it in a bear market. But it’s still up 35% so far this year and double what it was at this time last year, thanks in large part to billions of dollars flowing into new exchange-traded funds since January.
“The recent downtrend can be attributed to increased profit-taking by investors who entered the market during the 2022 and 2023 downturns, as well as ETF investors who saw significant share price appreciation after entering the market in the early weeks of 2024,” said Fineqia research analyst Matteo Greco.
Cryptocurrency-related stocks fell in U.S. premarket trading. Shares of cryptocurrency exchange Coinbase fell 4.6%, while shares of miners Riot and Marathon Digital fell 4.2-4.3%.
On the macroeconomic front, the Federal Open Market Committee (FOMC) is not expected to make any changes to interest rates, but investors are increasingly convinced that the central bank may not cut rates at all this year, dealing a severe blow to interest rate-sensitive assets such as cryptocurrencies, emerging market stocks and bonds, or even commodities.
Investors have responded accordingly. The 10 largest U.S. spot bitcoin ETFs are facing their biggest weekly outflows since their inception in January.
Outflows hit $496 million this week, according to LSEG data, largely because flows into BlackRock’s iShares Bitcoin Trust, the largest by holdings, slowed.
Smaller altcoins, which can sometimes take advantage of the weakness of the two big coins, have also been punished. Data from cryptocurrency website Coingecko shows Solana’s sol token has lost nearly a quarter of its value in the past seven days, as have meme coins dogecoin and shiba inu, both popularized in 2021 in part by Tesla owner Elon Musk.
Bitcoin’s so-called “halving event” last month did little to support the price. Since the halving occurred on April 20, Bitcoin has fallen by about 15%. Many investors have been investing in the market ahead of the event, which involves a change to the cryptocurrency’s underlying technology designed to slow the rate at which new bitcoins are created.
On the charts side, Alex Kuptsikevich, senior market analyst at FXPro, said that bitcoin’s decline is entering a new phase.
May is not only a month of seasonal weakness for bitcoin, but the price decline in recent weeks has also highlighted the $55,700 and $51,000-52,000 levels, he said.
“However, both today’s FOMC announcements and Friday’s monthly employment data have the potential to accelerate or reverse the downtrend,” he said.
(Reporting by Amanda Cooper, additional reporting by Samuel Indyk; editing by Stefano Rebaudo, Ros Russell and Louise Heavens)