Bitcoin Dips to $66,967 Amid Federal Reserve Meeting Anticipation and Increased Sell Pressure

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The value of Bitcoin has once again experienced a significant dip, dropping by 4.7% from a high of $71,231 down to an approximate value of $66,967. This descent into volatility in the market encapsulates the ebb and flow of the crypto universe, influenced by a multitude of pivotal elements.

One key factor catalyzing the fluctuation is the anticipation surrounding the Federal Reserve’s Federal Open Market Committee (FOMC) meeting slated for Wednesday, June 12th. Currently, the Bitcoin arena appears to have retreated into a risk-off state as it prepares for whatever the outcome of the meeting might be. The market’s prodigious sensitivity towards macroeconomic determinants is evident as players keenly anticipate the US Federal Reserve’s resolution on interest rates and its economic projection.

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The likelihood is that the Fed will sustain the interest rates in the 5.25% to 5.50% range. However, the market stands equal parts hopeful and anxious for the Fed’s revised dot plot, expected to swing to a more hawkish stance. The proposed alteration entails cutting down the number of anticipated rate cuts for 2024 from three to possibly only two, with speculations about only one rate cut being rife. This hawkish adjustment in monetary policy is positioned to significantly impact investor habits, as increased interest rates typically curtail the lure of non-yielding assets, including cryptocurrencies.

In addition to the mounting uncertainty, the May 2024 US Consumer Price Index (CPI) data release is slated for few hours before the FOMC’s announcement, fueling further nervous anticipation. Recent reactions to US macroeconomic data indicate that any discrepancies from expectations may instigate considerable price upheavals.

Critical to the recent price drop is the heightening of spot selling pressure, identified as the immediate catalyst. An examination by alpha dōjō projects that immense selling pressure substantially contributed to the slide down to a low of $67,000. The market dynamics observed throughout this phase denote a significant shift, with an escalated volume of sell orders overwhelming inadequate buy orders, causing a breach in the robust support zone around $68,000.

Simultaneously, the investment dynamics within the Bitcoin spot ETFs reflect the bearish sway in the market. After 19 days of continuous inflows, these funds saw considerable outflows yesterday, amounting to $64.9 million. The Grayscale Bitcoin Trust experienced outflows of $39.5 million, while BlackRock registered smaller inflows of $6.3 million.

The trend amongst other ETF providers varied, with Fidelity reporting outflows topping $3 million, and Bitwise registering inflows of $7.6 million. In the meantime, Invesco witnessed outflows of $20.5 million, and Valkyrie noted outflows of $15.8 million.

Despite the tumultuous market forces at play, Bitcoin remains a key contender in the realm of virtual assets. And just like any other market, it continues to demonstrate that it is as susceptible to the ebbs and flows of global economic tremors.