Bitcoin Hits Low of $56,963 as Investors Eye Fed Rates
As the global financial community anticipates the Federal Reserve’s decision on interest rates, Bitcoin’s value has dipped significantly, falling below $57,000. This marks the cryptocurrency’s lowest value since late February.
At press time, BTC was trading at $56,963, showing an 8.57% decrease in the past 24 hours. This drop is part of a larger downward trend that began from a high of $62,300. Bitcoin’s market capitalization also decreased to $1,121,755,222,264. Additionally, there was a notable increase in trading volume by 75.93%, totaling around $45,297,669,023.
BTC/USD 1-day price chart (Source: CoinMarketCap)
This downward trend was not isolated to Bitcoin alone; other major cryptocurrencies also experienced declines. Ethereum, for example, saw a reduction of around 9% in its value, while other altcoins like Solana, Dogecoin, and Avalanche recorded losses exceeding 10%. The crypto market’s poor performance reflects a broader move away from riskier assets, influenced by concerns over the U.S. economic outlook, which combines slow growth with persistent inflation. This scenario diminishes the likelihood of an interest rate cut by the Federal Reserve.
Industry Perspective on the Correction
Despite the steep declines, industry experts maintain a long-term perspective on market corrections. Global Macro Investor CEO Raoul Pal noted that this type of correction is not unusual in the cryptocurrency space, citing it as the fourth of its magnitude within the last 12 months.
This is the 4th 20% correction in BTC in 12 months…pretty ordinary stuff. pic.twitter.com/YT3gs4jUlG
— Raoul Pal (@RaoulGMI) April 30, 2024
Moreover, historical data from previous bull markets shows that even larger corrections have occurred in the past. Cryptocurrency analyst Cold Blooded Shiller suggested that the market could see further declines, potentially reaching lower support levels around $52,000 before a recovery ensues.
Charles Edwards, founder of Capriole Fund, echoed a similar sentiment, emphasizing the need for investors to be prepared for fluctuations in such a volatile asset class. Meanwhile, the broader financial landscape, including stocks, commodities, and bonds, also faced downturns, which Macroeconomics outlet the Kobeissi Letter attributed to rising uncertainties ahead of the Fed’s forthcoming policy announcement.
Altcoins Face the Brunt
The altcoin sector has been particularly hard hit, with Ethereum dropping below the $3,000 mark briefly before staging a minor recovery. Other cryptocurrencies like Solana, Dogecoin, Shiba Inu, Avalanche, Bitcoin Cash, and Near Protocol also saw substantial declines. The total market capitalization of cryptocurrencies shed about $135 billion in the past 24 hours, underscoring the extent of the sell-off.
The crypto market’s downturn coincided with news that Changpeng Zhao, the former CEO of Binance, has been sentenced to four months in prison, adding to the negative sentiment within the market. This legal development contributed to heightened caution among investors, leading to a rapid withdrawal from digital asset investments.
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