Bitcoin experienced a slight downturn on Wednesday, exhibiting minimal positive movement despite a weakening dollar, as traders adopted a cautious stance ahead of crucial U.S. consumer inflation data.
The world’s largest cryptocurrency recorded a 0.9% decline over the past 24 hours, settling at $61,974.9 by 01:28 ET (05:28 GMT).
Despite a dip in the dollar’s value on Tuesday, following remarks from Federal Reserve Chair Jerome Powell indicating a halt in further interest rate hikes, Bitcoin failed to capitalize on the currency’s depreciation. Powell, while underscoring that current monetary policy was sufficiently restrictive, expressed reservations about inflation’s trajectory, citing a lack of confidence in its return to the targeted 2% annual mark.
This sentiment was exacerbated by hotter-than-anticipated producer price index data for April, potentially setting the stage for a robust consumer price index reading later in the day.
Moreover, dwindling capital flows into Bitcoin and other crypto investment products, coupled with the specter of increased regulatory scrutiny, further dampened sentiment towards crypto markets.
In Hong Kong, three spot Bitcoin and Ethereum exchange-traded funds witnessed significant outflows totaling nearly $40 million on Monday, erasing two weeks of inflows since their April 30 debut. While the exact catalyst for the outflows remains unclear, they coincided with souring sentiment towards Hong Kong and Chinese markets amid heightened U.S. trade tariffs on Beijing and mixed economic indicators from China.
Similarly, the approval of spot Bitcoin ETFs for U.S. markets failed to sustain enthusiasm, with Bitcoin largely trading within a $60,000 to $70,000 range for the past two months, despite initial record highs exceeding $73,000 in early March.
Furthermore, broader cryptocurrency prices experienced a retreat as traders adopted a risk-averse stance ahead of the U.S. CPI data. Ethereum, Solana, and XRP saw declines of more than 1%, 3%, and 1.2%, respectively.
While meme stocks like GME and AMC briefly rallied, meme tokens such as Dogecoin and Shiba Inu recorded losses of over 3% and nearly 3%, respectively.
The prospect of sustained high U.S. inflation is likely to prolong elevated interest rates, posing a challenge to crypto markets accustomed to thriving in low-rate, high-liquidity environments.
