The price of Bitcoin experienced a nearly 5% drop on Tuesday, falling to a low of $66k as the cryptocurrency market turned bearish in anticipation of this week’s FOMC meeting.
Bitcoin’s price on Coinbase plummeted to $66,018, erasing the gains made when it reached $71,974 last Friday. Data from CoinGecko indicated that Bitcoin was trading down by almost 5% within a 24-hour period. The leading cryptocurrency had also shed 6% of its value for the week at the time of reporting.
The recent decline in Bitcoin’s price can be attributed to several factors. For one, spot Bitcoin ETFs saw outflows of around $65 million on Monday, ending a 19-day streak of net inflows. Additionally, a Bitcoin wallet that had been inactive for over 5 years suddenly transferred 8,000 BTC, valued at more than $535 million, to various addresses, including Binance.
Investors are currently adopting a risk-off stance ahead of the release of CPI data and the FOMC meeting. The upcoming minutes from the Federal Reserve and Fed Chair Jerome Powell’s remarks are being closely monitored by market participants. This, along with other economic reports slated for the week, could heavily influence investor decisions.
Analysts at QCP Capital, a global digital asset trading firm, emphasized the significance of the FOMC meeting, particularly the release of the Dot Plot, which reveals the Fed’s anticipated interest rate cuts for the remainder of 2024.
Despite the current market conditions, some analysts remain optimistic about Bitcoin’s future. Pseudonymous crypto analysts Moustache and Max pointed out that historically, FOMC meetings have been bullish for Bitcoin. They noted that previous meetings have resulted in a dip followed by a bullish reversal, suggesting a potential pattern for the current situation. Ali Martinez, another crypto analyst, highlighted Bitcoin’s tendency to rebound after FOMC meetings, indicating a positive outlook for the cryptocurrency.