After recording its worst monthly performance in April since late 2022, Bitcoin fell about 6% on Wednesday as investors withdrew their funds from cryptocurrencies before the Federal Reserve’s announcement regarding interest rates. Earlier it fell by nearly 16% in April, as investors booked profits on a sizzling rally that has taken the price to record highs above $70,000.
Bitcoin fell by 5.6% to its lowest since late February. It was last down 4.8% at $57,001, while losses in ether were more modest, down 3.6% at $2,857, also at its weakest since February. With this, the price of bitcoin is now a full 22% below March’s record of $73,803. However, it is still up 35% so far this year and double where it was this time last year.
Crypto-related stocks also fell in U.S. premarket trading. Shares in crypto exchange Coinbase fell 4.6%, while those in miners Riot and Marathon Digital dropped 4.2-4.3%. On the macro front, the Federal Open Market Committee (FOMC) is not expected to make any changes to interest rates, but the view is taking root among investors that the central bank may not cut rates at all this year, delivering a blow to interest rate-sensitive assets such as cryptocurrencies, emerging market stocks and bonds or even commodities.
The 10 largest U.S. spot bitcoin ETFs are facing their biggest weekly outflow since their inception in January. Outflows are up to $496 million this week, mostly as flows into BlackRock’s iShares Bitcoin Trust, the largest in terms of holdings, have slowed, according to LSEG data.
Even smaller alt-coins, which can sometimes benefit from weakness in the two big tokens, have been punished. Data from crypto website Coingecko shows Solana’s sol token has lost almost a quarter of its value over the last seven days, as have meme coins dogecoin and shiba inu – both made popular in 2021 in part by Tesla owner Elon Musk.
Bitcoin’s so-called “halving event” last month has done little to prop up the price. Since April 20, when halving took place, bitcoin has dropped some 15%. Many investors bought into the market in the run-up to the event, which involves a change to the cryptocurrency’s underlying technology designed to cut the rate at which new bitcoins are created.
(with inputs from Reuters)