Bitcoin witnessed a further decline on Thursday, as the cryptocurrency market struggled against the backdrop of persistently high U.S. interest rates, dampening risk sentiment across the board.
Amidst this backdrop, attention turned to the impending halving event and its potential ramifications on Bitcoin‘s long-term supply dynamics.
In the past 24 hours, Bitcoin experienced a 3.3% drop, with its price settling at $61,767.3 by 00:46 ET (04:46 GMT).
With less than 300 blocks remaining until block no. 840,000 is generated on the Bitcoin blockchain, all eyes are now on the halving event, slated to occur by April 20. This event will effectively reduce the rate at which new Bitcoin is mined by halving rewards for miners, underscoring Bitcoin’s inherent scarcity and its potential to support price appreciation.
However, historical analysis suggests that the direct correlation between previous halving events and immediate price surges in Bitcoin remains ambiguous. Instead, external factors such as interest rates and risk appetite, particularly within U.S. technology stocks, have exerted greater influence on Bitcoin’s price trajectory.
Despite earlier momentum propelled by the U.S. approval of spot exchange-traded funds, Bitcoin’s upward trajectory now appears to be tapering off. The cryptocurrency space, including Bitcoin, has traditionally thrived in low-interest rate environments characterized by high liquidity, a scenario anticipated to materialize later in 2024.
Meanwhile, broader cryptocurrency prices faced sustained losses as traders tempered expectations for a June interest rate cut by the Federal Reserve. Strong inflation data and hawkish signals from Fed officials contributed to this sentiment, dampening enthusiasm in the crypto market.
Ethereum, the second-largest cryptocurrency, experienced a 3.3% decline to $3,009.41, while Solana and XRP recorded losses of 5% and 0.1% respectively.
Despite the varied performance across the cryptocurrency spectrum, gains in the market this year have predominantly favored Bitcoin, particularly following the approval of spot ETFs. With Bitcoin commanding over 55% of the total crypto market value, its movements continue to shape the broader landscape of digital assets.
