On Thursday, Bitcoin experienced a slight decline, remaining within a tight trading range observed throughout the week amid anxieties over U.S. interest rates and apprehensions regarding heightened regulatory scrutiny on cryptocurrencies.
The world’s largest cryptocurrency witnessed a 1.1% drop over the past 24 hours, settling at $69,681.7 by 01:36 ET (05:36 GMT).
Following its surge to record highs earlier in March, Bitcoin has maintained a rangebound trajectory for two weeks. This moderation in enthusiasm comes as the influx of capital into recently approved spot exchange-traded funds (ETFs) for cryptocurrencies has slowed down, signaling a potential cooling of interest in the digital asset.
Furthermore, the strengthening dollar, reaching one-month highs this week, has hindered significant upward movement in Bitcoin. Dovish remarks from major global central banks have led traders to favor the dollar as a high-yielding, low-risk currency, thereby exerting pressure on Bitcoin’s price dynamics.
Anticipation Builds Ahead of PCE Data and Fed Communications
Market attention is now fixated on the release of the Personal Consumption Expenditures Price Index (PCE) data, scheduled for Friday. This index, regarded as the Federal Reserve’s preferred inflation metric, is anticipated to influence the central bank’s stance on interest rates.
While the Fed has maintained projections for 75 basis points of rate cuts in 2024, any indications of persistent inflation could potentially prompt a reassessment of this outlook. Prolonged expectations of higher interest rates unfavorably impact Bitcoin, which typically flourishes in high-liquidity, risk-inclined environments.
Subsequent to the PCE data release, Federal Reserve officials Jerome Powell and Mary Daly are slated to deliver separate speeches on Friday. Market participants will closely monitor these communications for insights into the Fed’s stance on interest rates and inflation, particularly amidst recent somewhat hawkish tones struck by other Fed officials.
Governor Christopher Waller underscored on Wednesday that the central bank is in no rush to initiate interest rate cuts, citing persistent inflation and the robustness of the U.S. economy as factors maintaining tight monetary conditions.
SEC-Coinbase Legal Battle Weighs on Sentiment
Market sentiment towards crypto assets was further perturbed by a significant development in the Securities and Exchange Commission’s lawsuit against cryptocurrency exchange Coinbase Global Inc (NASDAQ: COIN).
A U.S. judge ruled that while the lawsuit, initiated in 2023, may proceed, one claim filed by the SEC against Coinbase was dismissed.
The SEC’s recent victory in a lawsuit against XRP token issuer Ripple, coupled with reports of the agency seeking $2 billion in penalties from Ripple, underscores the significance of the SEC-Coinbase legal dispute for crypto markets. This legal uncertainty has contributed to Bitcoin’s trading within a narrow range.
Despite Bitcoin’s recent consolidation, it remains on track for an impressive over 50% gain in the first quarter of 2024. This surge is primarily fueled by heightened capital inflows following the approval of spot ETFs in the United States earlier this year.
In comparison, the S&P 500 recorded an 11% increase in Q1, while gold saw a rise of approximately 6.5%.