Bitcoin experienced a modest decline on Friday, reflecting subdued sentiment in the crypto markets amidst mounting expectations of prolonged higher interest rates in the United States, fueled by the latest inflation figures.
The world’s leading cryptocurrency retreated by 1.3% over the past 24 hours, settling at $64,032.8 by 13:54 ET (18:54 GMT). Despite this downturn, Bitcoin‘s weekly performance remained relatively flat, confined within a trading range of $60,000 to $70,000 established over the preceding six weeks.
Concerns regarding ongoing regulatory scrutiny on cryptocurrencies surfaced prominently this week, particularly with reports revealing U.S. prosecutors’ pursuit of a three-year prison sentence for Changpeng Zhao, the embattled founder of Binance, who admitted to violating anti-money laundering laws.
Bitcoin and the broader crypto market failed to capitalize on the overnight weakening of the dollar following disappointing U.S. gross domestic product (GDP) data. However, a stronger GDP price index reading prompted traders to further recalibrate their expectations regarding potential Federal Reserve interest rate cuts.
According to the CME Fedwatch tool, traders are now only factoring in the possibility of rate cuts by September or the fourth quarter of 2024.
The anticipation of persistently higher U.S. interest rates deterred traders from embracing Bitcoin and other cryptocurrencies, as it erodes the attractiveness of volatile and speculative assets. Bitcoin typically thrives in environments characterized by low interest rates and ample liquidity.
Despite positive signals from U.S. technology stocks, spurred by robust earnings reports from tech giants such as Microsoft Corporation and Alphabet Inc, Bitcoin remained largely indifferent. Its correlation with U.S. tech stocks, albeit apparent in recent weeks, has primarily manifested in a negative context.
Elsewhere in the crypto sphere, altcoins displayed a mixed performance following the release of crucial U.S. inflation data. Ethereum, the second-largest token, dipped by 0.9%, while Solana experienced a more significant decline, dropping by 4.1%. XRP also registered a slight decrease of 0.8%.
Later in the day, the release of the PCE price index data for March, the Federal Reserve’s preferred inflation gauge, was anticipated to influence the central bank’s stance on interest rates.
In separate developments within the crypto investment landscape, Cathie Wood’s ARK Invest concluded the divestment of its remaining shares in the ProShares Bitcoin Strategy ETF (BITO), totaling 237,983 shares valued at $6.7 million based on the closing price of $28.22. These shares were previously held in its Next Generation Internet ETF (ARKW).
ARK initially acquired over 4 million shares of BITO last year, viewing the investment as a short-term strategy in anticipation of U.S. approvals for spot bitcoin ETFs. Following ongoing sales since January, ARK finalized the disposal of its BITO shares over the past week.
Meanwhile, ARK’s ARK 21Shares Bitcoin ETF (ARKB) has emerged as the firm’s largest holding, comprising 2,480,644 shares valued at $160.6 million, based on Thursday’s closing price of $64.76.
