Bitcoin experienced a slight decline on Wednesday as the US dollar exhibited strength, coupled with recent data indicating a slowdown in capital flows into the crypto market, signaling a growing cautious sentiment among investors.
The world’s most prominent cryptocurrency saw a drop of nearly 2% on Wednesday, settling at $68,662.6 by 13:59 ET (17:59 GMT). Earlier in the day, it had surged past the $71,000 mark before retracting.
The resilience of the US dollar played a pivotal role in curtailing any further upward movement in Bitcoin, as traders leaned towards the dollar, awaiting more cues on US interest rates. The dollar index remained within striking distance of a one-month high on Wednesday.
Recent indications from the Swiss National Bank and the Bank of England leaned towards a dovish stance, prompting traders to favor the dollar as a high-yielding, low-risk currency, at least until the Federal Reserve signals its stance on interest rates.
The upcoming release of the PCE price index data, the Fed’s preferred inflation metric, later in the week is expected to provide further insights. Any indications of persistent inflation could tilt the Fed towards a more hawkish stance, potentially delaying its plans for interest rate cuts.
Key figures within the Federal Reserve, including Chair Jerome Powell and FOMC member Mary Daly, are scheduled to speak later in the week, offering additional clues regarding interest rate trajectories.
The anticipation of higher US interest rates, at least in the short term, led traders to opt for safer bets in the dollar over Bitcoin, particularly given Bitcoin’s historical susceptibility to pressure in high-rate environments. Bitcoin faced significant losses in late 2022 as interest rates rose, plummeting to lows around $15,000.
Despite its recent surge to record highs above $73,000, recent data from digital assets manager CoinShares revealed a slowdown in capital flows into Bitcoin ETFs in recent weeks. Moreover, sustained outflows from the Grayscale Bitcoin Trust (GBTC) ETF exerted downward pressure on the cryptocurrency.
The surge in Bitcoin ETF inflows over the past seven weeks, driven by the approval of spot ETFs in the US, decelerated as investor sentiment turned cautious amidst uncertainties surrounding US interest rates.
In parallel developments within the cryptocurrency sphere, asset management firm VSFG, in collaboration with Value Partners, has submitted an application for a spot Bitcoin ETF to the Securities and Futures Commission (SFC) in Hong Kong. This move follows reports suggesting that the SFC may soon allow in-kind creations and redemptions for such ETFs in the upcoming quarter.
This initiative mirrors the approval of spot Bitcoin ETFs in the US in December 2023, signaling a broader acceptance of such products by regulators globally.
In a separate development, Fetch.ai, SingularityNET, and Ocean Protocol announced a merger of their tokens to form an alliance dedicated to decentralized artificial intelligence (AI). The aim is to create an AI collective as a decentralized alternative to dominant models controlled by major tech firms.
Under this collaboration, Fetch.ai’s token (FET) will transition into ASI – “artificial superintelligence” – with an initial total supply of approximately 2.63 billion tokens and an initial price of $2.82. Tokens from SingularityNET (AGIX) and Ocean Protocol (OCEAN) will merge into ASI at rates around 0.433 to 1, targeting a fully diluted market capitalization of about $7.5 billion.
This alliance underscores a growing interest in AI technologies and concerns over potential monopolization by major corporations, prompting blockchain and Web3 companies to develop alternative frameworks focusing on transparency and communal data sharing.
