(Bloomberg) — Bitcoin sank amid slowing demand for dedicated U.S. exchange-traded funds and declining bets on the Federal Reserve's looser monetary policy.
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The digital asset fell as much as 5.3% before paring some of the decline to trade at $66,735 as of 1:10pm on Tuesday in Singapore. Tokens previously favored by the meme crowd such as Pepe and dogwifhat also fell, sending a measure of smaller digital assets to its biggest two-day decline in about two weeks.
Cryptocurrencies' sharp rally this year is losing momentum as persistent price pressures in the United States prompt investors to limit bets on federal interest rate cuts, sending Treasury yields and the dollar higher. This is a more difficult backdrop for speculative angles in global markets such as the digital assets sector.
Stephan said the changing views on the Fed are having an impact “across cryptocurrencies, where there was a sell-off at the start of the week — no sector was affected, especially ones where prices have outperformed Bitcoin over the past six months, for example memes.” Von Hanisch, Head of Trading at OSL SG Pte.
Bitcoin has fallen about 10% since peaking at $73,798 in mid-March. Daily inflows into U.S. spot bitcoin ETFs have declined, impacting the largest digital assets. On Monday, investors pulled a net $86 million from a suite of 10 products, which have attracted about $12 billion since their launch on January 11, according to data compiled by Bloomberg.
Richard Galvin, co-founder of DACM, said the cryptocurrency market looked “weak” over the past 12 hours in the wake of the latest US economic data.
The figures showed that US manufacturing unexpectedly expanded for the first time since September 2022 and input costs rose. In the wake of the report, the amount of Fed easing included in this year's swap contracts fell to about 65 basis points – below policymakers' expectations.
The supply of new Bitcoin tokens is set to halve this month, a four-year event that some traders see as a boost for the cryptocurrency. Others argue that further gains will be difficult given the token has quadrupled since the start of 2023.
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