Bitcoin experienced a relatively flat performance on Monday following a sharp decline over the weekend, which saw the cryptocurrency retract from recent highs. The focus now lies on pivotal signals regarding U.S. interest rates, with investors closely monitoring developments.
Last week, the world’s largest cryptocurrency surged to as high as $72,000, nearing its record highs reached in March. However, profit-taking ensued alongside a resurgence in the dollar, leading to a pullback from Friday onwards.
Over the past 24 hours, Bitcoin saw a marginal decline of 0.3%, settling at $69,446.5 by 08:51 ET (12:51 GMT).
Bitcoin’s weekend setback followed a stronger-than-anticipated nonfarm payrolls report, prompting traders to reassess expectations of Federal Reserve rate cuts in September. This shift in sentiment bolstered the dollar, subsequently dampening broader crypto prices.
The upcoming Federal Reserve meeting is now under scrutiny, with market consensus anticipating the central bank to maintain rates during its two-day session ending Wednesday. However, the Fed’s stance on rates will be of paramount importance.
Prior to the Fed’s decision, attention is also on the release of consumer price index (CPI) inflation data on Wednesday. Forecasts suggest inflation will remain above the Fed’s 2% annual target, potentially dissuading the central bank from adjusting rates.
Persistently high interest rates pose challenges for Bitcoin and the broader cryptocurrency market, which typically thrive under conditions of increased liquidity and relaxed lending.
Elsewhere in the crypto sphere, altcoins were predominantly in the red, reflecting concerns over elevated interest rates and profit-taking following May’s gains.
Ether, the second-largest cryptocurrency, dipped by 0.6% to $3,680.27 on Monday after shedding nearly 4% on Friday. Meanwhile, XRP, SOL, and ADA experienced minor fluctuations, while Solana registered a 1.5% decline. Among meme coins, the Investing.com Shiba Inu Index and DOGE/USD slipped by 1.3% and 1.8%, respectively.
Institutional interest in crypto remains robust, with crypto investment products witnessing significant inflows. According to a report by asset manager CoinShares, crypto investment products attracted nearly $2 billion in inflows last week, extending a five-week streak to over $4.3 billion.
Bitcoin led the surge with inflows exceeding $1.97 billion, while ether saw its best week since March, garnering nearly $70 million in inflows.
Interest in spot bitcoin exchange-traded funds (ETFs) in the U.S. has revived since mid-May, following a lackluster April. Inflows surged, making BlackRock’s IBIT the largest bitcoin ETF, accumulating over $20 billion in assets since its January launch.
The unexpected SEC decision to permit spot ether ETFs likely fueled increased buying of ETH. Traders anticipate ongoing inflows into ETH products in the coming months, potentially driving a rally towards the end of the year.
Tyr Capital, a digital asset manager, predicts that $5-10 billion of fresh capital could flow into ether products in the short to medium term, fueling a potential rally towards new record highs. With ETH now becoming deflationary, a price target of $10,000 in 2024 appears increasingly plausible.
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