Bitcoin is sinking due to easing interest rate cuts by the Fed and declining demand for ETFs

(Bloomberg) — Bitcoin sank amid declining demand for specialty U.S. exchange-traded funds and declining bets on looser monetary policy from the Federal Reserve.

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The digital asset fell as much as 5.3% before recouping some of the decline and changing hands to $66,735 at 1.10pm in Singapore on Tuesday. Tokens previously favored by the meme crowd, such as Pepe and dogwifhat, also fell, sending a number of smaller digital assets to their biggest two-day declines in about two weeks.

This year’s steep crypto rally is losing steam as persistent US price pressures prompt investors to rein in their bets on Fed rate cuts, sending Treasury yields and the dollar higher. That’s a more difficult backdrop for speculative corners of global markets, such as the digital assets sector.

The changing views on the Fed are having an impact “across crypto, where there has been a sell-off over the course of the week – no sector is left unaffected, especially those where prices have outperformed Bitcoin over the past six months, for example memes ”, says Stefan. von Haenisch, head of trading at OSL SG Pte.

Bitcoin is down about 10% since reaching a peak of $73,798 in mid-March. The flow of daily inflows into US spot Bitcoin ETFs has slowed, weighing on the largest digital assets. On Monday, investors pulled a net $86 million from the suite of 10 products, which has attracted about $12 billion since going live on Jan. 11, according to data compiled by Bloomberg.

The crypto market has looked “weak” over the past 12 hours in the wake of the latest US economic data, says Richard Galvin, co-founder of DACM.

The figures showed that US production grew unexpectedly for the first time since September 2022 and inputs…

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