Bitcoin enthusiasts faced a roller coaster ride on Tuesday as the leading cryptocurrency fell almost 5%, falling below $68,000. This sharp decline erased gains made during a bull run that saw BTC hit $71,950 last week. Analysts are scrambling to decipher the reasons for this sudden skid and predict Bitcoin’s next move, ahead of the highly anticipated Federal Open Market Committee (FOMC) meeting.
Risk aversion reigns as investors look to FOMC, inflation data
The crypto market appears to reflect the broader financial landscape, where a cautious attitude reigns. Investors are taking a “risk-off” approach as they prepare for the release of crucial economic data, including the Consumer Price Index (CPI) and Consumer Price Index. FOMC meeting.
The CPI report, a key indicator of inflation, is expected to shed light on the state of the US economy. Another major event that could have a significant impact on investor sentiment is the FOMC meeting, where the Federal Reserve will decide interest rates.
The coming week presents a perfect storm for riskier assets like Bitcoin. The combination of potential interest rate hikes and inflationary concerns is dampening investor appetite. This risk aversion is likely translating into outflows from Bitcoin, leading to the price decline we are seeing.
A wallet inactive for 5.5 years transferred 8K $BTC($535.64 million) to #Binance 40 minutes ago.
The wallet received 8K $BTC on December 6, 2018, when the $BTC the price was $3,810.https://t.co/zvxAKbHKi6 pic.twitter.com/ZKZHdm4JkR
– Lookonchain (@lookonchain) June 11, 2024
Dormant Bitcoin wakes up, adding fuel to the fire
A large Bitcoin move that occurred earlier Tuesday added another layer of intrigue to the price movement. A wallet that had been dormant for over five years suddenly came back to life, moving a whopping 8,000 BTC, valued at over half a billion dollars, to multiple addresses, including the major crypto exchange Binance currency. The sudden movement of such a large amount of Bitcoin could have triggered some short-term volatility in the market.
Analysts Share Their Views on Bitcoin’s Post-FOMC Trajectory
Even though the immediate future seems uncertain, some analysts remain optimistic about Bitcoin’s long-term prospects. Markets are “in risk aversion mode ahead of tomorrow’s CPI and FOMC,” commented analysts at QCP Capital, a global digital asset trading firm and market maker.
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3. Markets are in risk aversion mode ahead of tomorrow’s CPI and FOMC. This month’s FOMC will also release the Dot Plot, which informs the market how many cuts the Fed plans for the remainder of 2024.
– QCP (@QCPgroup) June 11, 2024
This sentiment is echoed by some crypto analysts on social media. Popular figures like Mustache and Max have highlighted historical instances where FOMC meetings coincided with price declines followed by bullish reversals.
The last 3 FOMC meetings were spread over $BTCprice action.
We’ve seen this before. pic.twitter.com/GQhTLV5pll
– Max (@MaxBecauseBTC) June 11, 2024
Featured image from Pexels, chart from TradingView
