Written by Amanda Cooper
LONDON (Reuters) – April's worst monthly performance since late 2022 fell almost 6% on Wednesday as investors pulled money out of cryptocurrencies ahead of the Federal Reserve's upcoming interest rate decision. Ta.
The value of the world's most traded cryptocurrency fell nearly 16% in April as investors booked profits on a wild rally that sent its price to a record high of more than $70,000.
Bitcoin fell as much as 5.6%, hitting its lowest price since late February. Previously, it fell 4.8% to $57,001, but Ether's losses were more modest, dropping 3.6% to $2,857, also the lowest since February.
Bitcoin price is currently 22% below its March record of $73,803, technically entering a bear market. But it's still up 35% so far this year, double what it was this time last year, largely due to billions in newly created exchange-traded funds (ETFs) since January. This is due to the influx of dollars.
“The recent downtrend is due to profit-taking by investors who entered the market during the economic downturn in 2022 and 2023, as well as by ETF investors who witnessed a significant rise in stock prices after entering the market in the early weeks of 2024. ” said Matteo Greco, Research Analyst at Fineqia.
Cryptocurrency stocks fell in pre-market trading in the United States. Shares of cryptocurrency exchange Coinbase (NASDAQ:) fell 4.6%, while shares of mining companies Riot and Marathon Digital (NASDAQ:) fell 4.2% to 4.3%.
On the macro front, the Federal Open Market Committee (FOMC) is not expected to make any changes to interest rates, but investors are betting that the central bank will not cut rates at all this year, potentially hurting interest rates. interest rate-sensitive assets such as cryptocurrencies, emerging market stocks and bonds, and even commodities.
remove ads
.
Investors are reacting accordingly. The top 10 U.S. spot Bitcoin ETFs are facing their biggest weekly outflows since their inception in January.
According to LSEG data, outflows this week reached up to $496 million, largely due to inflows into BlackRock's (NYSE:) iShares Bitcoin Trust, its largest holding. It's slowing down.
Even smaller altcoins that sometimes benefit from the weakness of the two big tokens are being punished. According to data from cryptocurrency website Coingecko, the Sol token has lost nearly a quarter of its value in the past seven days, with meme coins Dogecoin and Shiba Inu falling as well. Both were popularized in 2021 with the help of Tesla (NASDAQ:) owner Elon Musk.
Bitcoin’s so-called “halving event” last month did little to support prices. Since April 20, the day of the halving, Bitcoin has fallen by about 15%. Many investors bought into the market in the run-up to the event, which includes changes to the cryptocurrency's underlying technology designed to slow down the rate at which new Bitcoins are created.
Alex Kupczykevich, senior market analyst at the FXPro platform, said that from a chart perspective, Bitcoin's decline is entering a new phase.
Not only is May a seasonally weak month for Bitcoin, but the price decline over the past few weeks has focused on $55,700 and $51,000-$52,000, he said.
“However, both the FOMC's release later today and the monthly jobs report on Friday have a good chance of accelerating or reversing the downtrend.”
remove ads
.
