Bitcoin is hovering near its lowest level in about two weeks, affected by a decline in funds flowing into cryptocurrency exchange-traded funds, in addition to the continued decline in expectations of a U.S. interest rate cut.
Bitcoin has fallen almost every day since March 14 after hitting a record high of about $73,798, sparking speculation that the cryptocurrency has already hit its price peak. Bitcoin fell nearly 1% to $63,165 as of 11:22 a.m. Singapore time on Wednesday.
The decline comes amid concerns that Federal Reserve policymakers will scale back expectations of interest rate cuts at their upcoming meeting on Wednesday, as U.S. inflation remains above the central bank's target, potentially creating headwinds for speculative investments.
Demand for Bitcoin funds has waned.
Meanwhile, demand for U.S.-based spot bitcoin exchange-traded funds, which were hugely popular when they launched on Jan. 11, has slowed. The products have netted about $11.6 billion in inflows so far, but investors pulled some of their money out on Monday.
Although Bitcoin’s recent price drop is partly linked to the Fed’s expectations, it is a real test of the loyalty of some new crypto investors who bought Bitcoin at more than $60,000 in anticipation that the money will continue to flow into their new exchange-traded funds for a long time, according to Tony Sycamore, a market analyst at IG Australia.
The broader cryptocurrency market has lost about $420 billion from $2.9 trillion last week, according to data from CoinGecko. Other cryptocurrencies including Ethereum, BNB and the popular meme coin Dogecoin have also fallen over the same period.
