World’s biggest cryptocurrency Bitcoin slid as much as 3.78 per cent to $66,817 on Tuesday reflecting trader anxiety ahead of the US inflation data release and the Federal Reserve’s monetary policy decision.
Bitcoin reached a record high of $73,798 in March, boosted by inflows into dedicated US exchange-traded funds. However, it has struggled to achieve new highs since then. The upcoming inflation data and the Federal Reserve’s outlook on Wednesday could reinforce concerns that interest rates will remain elevated for an extended period, creating a challenging environment for speculative assets like cryptocurrency.
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“A recent batch of labor market figures exceeding expectations has cast doubt on the Federal Reserve’s likelihood of cutting interest rates anytime soon. This shift in sentiment has dampened risk appetite, adversely impacting cryptocurrencies. Bitcoin’s attempt to climb above $72K faltered, pulling back below $70K, without accelerating despite breaking downward resistance. Meanwhile, selling pressure remains subdued, indicating a market inclined towards buying,” said Rajagopal Menon, VP, WazirX.
Other than US inflation and Fed outlook, strong US employment report revealed that 272,000 jobs were added in May, significantly surpassing the forecast of 185,000. This strong jobs report, coupled with higher-than-expected wage growth, led to a sell-off in stock market futures and a surge in Treasury yields. The prospect of sustained higher interest rates pressured Bitcoin, causing it to fall sharply from a two-month high.
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