Bitcoin experienced a significant decline of almost 6% on Wednesday, following its worst monthly performance in April since late 2022. Investors withdrew funds from cryptocurrencies ahead of an anticipated interest rate decision by the Federal Reserve. During April, the value of Bitcoin dropped by nearly 16%, as investors opted to secure profits from a strong rally that had propelled the price to record highs above $70,000. Bitcoin’s value plummeted by as much as 5.6% to its lowest point since late February, reaching $57,001. Ether also experienced losses, albeit more modest, down 3.6% at $2,857, its lowest level since February.
Although Bitcoin’s price has fallen by 22% from its March record of $73,803, it remains up by 35% year-to-date and has doubled since this time last year. The influx of billions of dollars into newly established exchange-traded funds (ETFs) since January has contributed significantly to this surge.
Analyst Matteo Greco from Fineqia attributed the recent downtrend to increased profit-taking by investors who entered the market during the downturns of 2022 and 2023, as well as ETF investors witnessing significant price appreciation on their shares after entering the market in early 2024. In US premarket trading, crypto-related stocks also experienced declines. Shares in crypto exchange Coinbase fell by 4.6%, while those in miners Riot and Marathon Digital dropped by 4.2-4.3%.
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The Federal Open Market Committee (FOMC) is not expected to alter interest rates, but there is a growing belief among investors that the central bank may refrain from cutting rates this year. This outlook has negatively impacted interest rate-sensitive assets such as cryptocurrencies, emerging market stocks and bonds, and commodities.
In response, the ten largest US spot bitcoin ETFs are witnessing their most substantial weekly outflow since their inception in January. Outflows have reached $496 million this week, primarily as flows into BlackRock’s iShares Bitcoin Trust, the largest in terms of holdings, have slowed. Even smaller alt-coins, which sometimes benefit from weakness in major tokens, have suffered losses. Solana’s sol token has lost nearly a quarter of its value over the last seven days, along with meme coins dogecoin and shiba inu.
Bitcoin’s “halving event” last month, designed to reduce the rate at which new bitcoins are created, failed to support the price. Since the event on April 20, Bitcoin has declined by approximately 15%. Despite anticipation leading up to the halving, it appears to have had little impact on market sentiment.
