Bitcoin witnessed a 1.5% decline over the last 24 hours, settling at $62,613.8 by 08:55 ET (12:55 GMT), edging closer to the lower threshold of its established trading range of $60,000 to $70,000 since mid-March. The cryptocurrency market sentiment remained subdued amidst concerns surrounding higher U.S. interest rates and revisions to collateral regulations by the Depository Trust & Clearing Corporation (DTCC).
The DTCC, a prominent provider of private financial markets clearing and settlement services, announced the cessation of collateral allocation to exchange-traded funds and other investment vehicles with exposure to Bitcoin and cryptocurrencies, effective April 30. This move dampened crypto’s allure, typically a significant avenue for speculative investments.
Bitcoin’s downturn was exacerbated by fears of prolonged elevated U.S. interest rates, which have been a prominent factor weighing on the token’s performance in recent sessions. The cryptocurrency market often thrives in a low-rate, high-liquidity environment, thus reacting unfavorably to prospects of heightened borrowing costs.
Additionally, the release of the hotter-than-anticipated Personal Consumption Expenditures (PCE) price index data, the Federal Reserve’s preferred inflation metric, exerted further downward pressure on crypto markets. Persistent inflation concerns have dissuaded the Fed from considering rate cuts, with recent inflation metrics providing little impetus for policy adjustments.
Market focus now turns to the upcoming Federal Reserve meeting, with expectations of unchanged interest rates prevailing. The likelihood of rate cuts is anticipated to materialize by September or the fourth quarter.
Altcoins mirrored Bitcoin’s losses, reflecting the prevailing negative sentiment in the crypto sphere. Ethereum, the second-largest cryptocurrency by market capitalization, observed a 3.6% decline to $3,172.09, while XRP and Solana dipped by 2.1% and 4.3%, respectively.
Despite gains in technology stocks following robust earnings reports from U.S. tech giants Microsoft Corporation and Alphabet Inc, crypto prices failed to garner significant support. The historical correlation between crypto and U.S. tech stocks has weakened in recent months, with risk-off sentiments in the tech sector exacerbating declines in crypto prices.
Amidst the downturn, analysts at Bernstein offered a tempered outlook, viewing the deceleration in bitcoin ETF inflows as a transient pause rather than a foreboding trend. With Bitcoin’s price range-bound post-halving and no discernible momentum, Bernstein maintains its forecast of a cycle high of $150,000 by 2025, underpinned by anticipated inflows from ETF demand. Additionally, the report highlights the robustness of the bitcoin mining cycle post-halving, with leading players consolidating market shares and network fees stabilizing at a healthy level.
