Bitcoin experienced a drop of up to 5.3 per cent, trading at $66,920 as of 7:15 a.m. Tuesday in London, Bloomberg reported.
The decline also affected other tokens favoured by the meme crowd, leading to the largest two-day slide in smaller digital assets in about two weeks.
Persistent US price pressures are causing investors to pull back on bets for Federal Reserve interest-rate cuts, leading to a strengthening of treasury yields and the dollar.
This shift is slowing the robust crypto rally seen this year and creating a challenging landscape for speculative sectors like digital assets.
Stefan von Haenisch, head of trading at OSL SG Pte, noted that the changing perspectives on the Fed are impacting the entire crypto market, triggering a sell-off, especially in sectors where prices have outperformed bitcoin over the past six months.
Since reaching a peak of $73,798 in mid-March, bitcoin has lost about 10 per cent of its value. The easing of daily inflows into US spot-bitcoin ETFs, which have attracted about $12 billion since their launch on January 11, is putting pressure on the digital asset.
On Monday, investors withdrew a net of $86 million from these products.
Richard Galvin, co-founder of DACM, described the crypto market as “weak” following the release of the latest US economic data, which showed an unexpected expansion in US manufacturing for the first time since September 2022.
As a result, the amount of Fed easing priced into swap contracts for this year fell to around 65 basis points, less than policymakers’ predictions.
The supply of new Bitcoin tokens is set to halve this month, a quadrennial event that some traders believe supports the cryptocurrency. However, others argue that further gains may be difficult to achieve given that the token’s value has quadrupled since the start of 2023.
