Bitcoin experienced its poorest monthly performance since 2022, dropping nearly 6% on Wednesday as investors withdrew from cryptocurrencies in expectation of the Federal Reserve’s interest rate announcement.
The leading cryptocurrency’s value sank by almost 16% in April as investors cashed in on a remarkable rally that saw prices surpass $70,000.
Bitcoin sank to its lowest point since late February, down as much as 5.6%. It settled at $57,001, a 4.8% decrease, while ether saw milder losses, down 3.6% at $2,857, its lowest since February.
Currently, bitcoin is 22% below its peak of $73,803 set in March, indicating a bear market. Nonetheless, it’s up 35% this year and has doubled since this time last year, largely due to significant investments in recently established exchange-traded funds since January.
“Investors who entered during the downturns of 2022 and 2023, as well as ETF investors who saw substantial price appreciation after entering in early 2024, share some responsibility for the recent downturn,” said Matteo Greco, a research analyst at Fineqia.
In U.S. premarket trading, cryptocurrency-linked stocks fell. Coinbase’s stock dropped 4.6%, while Riot and Marathon Digital’s mining stocks fell 4.2-4.3%.
While the Federal Open Market Committee (FOMC) is not expected to change interest rates significantly, there’s a growing belief among investors that the central bank might not lower rates at all this year, which could be detrimental for interest rate-sensitive assets like cryptocurrencies.
Investors have reacted accordingly. The top ten U.S. spot bitcoin exchange-traded funds (ETFs) have seen their largest weekly outflow since their launch in January.
Outflows have reached $496 million this week, primarily as inflows into BlackRock’s iShares Bitcoin Trust, the largest in terms of holdings, have slowed.
Smaller altcoins have also suffered, despite occasionally benefiting from weaknesses in the major tokens. Solana’s sol token, along with meme coins dogecoin and shiba inu, have lost nearly a quarter of their value in the last seven days.
The anticipated “halving event” for Bitcoin last month did not significantly boost its value. Since the halving on April 20, bitcoin’s price has fallen by about 15%.
Also Read: UAE to expect more heavy rains after historic downpour
According to Alex Kuptsikevich, a senior market analyst for the FXPro platform, bitcoin’s decline is entering a new phase. He highlighted $55,700 and $51,000–52,000 as key levels of focus.
However, he noted, “there is potential for either acceleration or reversal of the downtrend following both the FOMC announcements later today and the monthly jobs data on Friday.”