Bitcoin experienced a slight decline on Thursday, maintaining its position within a trading range observed throughout the week, amidst expectations of further insights into U.S. interest rates and apprehensions surrounding heightened regulatory scrutiny in the cryptocurrency sphere.
The world’s foremost cryptocurrency saw a 1.1% decrease over the last 24 hours, settling at $69,681.7 by 01:36 ET (05:36 GMT).
Following its surge to record highs earlier in March, Bitcoin has remained rangebound for the past two weeks, with the momentum tempered by subdued capital inflows into recently approved spot exchange-traded funds, signaling a cooling of enthusiasm for the digital asset.
The strengthening of the dollar, reaching one-month highs this week, acted as another deterrent to significant Bitcoin gains, particularly in light of dovish statements from major global central banks, prompting traders to favor the greenback as a high-yielding, low-risk currency.
The looming focus of markets now lies on the Personal Consumption Expenditures (PCE) price index data, the Federal Reserve’s preferred inflation metric, scheduled for release on Friday, which is expected to influence the central bank’s interest rate outlook.
Despite the Fed’s projection of 75 basis points of rate cuts in 2024, indications of persistent inflation may lead to a reassessment of this outlook. Such a scenario of prolonged higher interest rates does not bode well for Bitcoin, typically thriving in high-liquidity, risk-prone environments.
Following the PCE data release, Federal Reserve officials Jerome Powell and Mary Daly are slated to speak at separate events later in the day, with market participants eagerly awaiting further insights into the Fed’s stance on interest rates and inflation, especially after some Fed officials struck a mildly hawkish tone earlier in the week.
On Wednesday, Governor Christopher Waller emphasized that the Fed was not rushing to commence interest rate reductions, citing persistent inflation and the robustness of the U.S. economy as factors supporting the maintenance of tight monetary conditions.
Market sentiment towards cryptocurrency was further unsettled by a significant development in the Securities and Exchange Commission’s lawsuit against Coinbase Global Inc (NASDAQ: COIN).
A U.S. judge ruled that while the lawsuit, initiated in 2023, could proceed, one of the SEC‘s claims against Coinbase was dismissed. This legal battle is of paramount importance for crypto markets, as it could potentially determine the regulatory treatment of crypto tokens under U.S. securities law, contributing to ongoing uncertainty and constraining Bitcoin’s trading activity within a narrow range.
Despite this period of stagnation lasting two weeks, Bitcoin remains poised for a over 50% gain in the first quarter of 2024, primarily propelled by increased capital inflows following the approval of spot ETFs in the United States earlier this year.
In comparison, the S&P 500 registered an 11% increase in the first quarter, while gold saw a gain of approximately 6.5%.
