Bitcoin experienced a decline on Thursday, dropping to $63,599.5 earlier in the day before stabilizing around $64,256.2 by 02:01 ET, representing a 2.9% drop in the past 24 hours. The decline comes despite a rally on Wall Street following the Federal Reserve’s indication of a possible interest rate cut in September.
Key Drivers Behind Bitcoin’s Decline
1. Federal Reserve’s Rate Cut Speculation:
The Federal Reserve’s decision to keep interest rates steady was in line with expectations. However, Fed Chair Jerome Powell’s mention of a potential rate cut in September if favorable data emerges spurred a rally in equities. While such lower rates are typically seen as positive for cryptocurrencies due to increased liquidity, Bitcoin’s price did not mirror this optimism.
2. U.S. Government Bitcoin Sale Concerns:
Sentiment in the crypto market was also affected by fears of a mass sale by the U.S. government, which was rumored to be mobilizing around $2 billion worth of Bitcoin earlier this week. This potential sale has likely contributed to downward pressure on Bitcoin prices.
3. Political Developments:
Crypto-positive promises from Republican presidential nominee Donald Trump had provided a temporary boost to Bitcoin. However, these gains were offset by a Bloomberg poll showing Democratic frontrunner Kamala Harris overtaking Trump in several battleground states, diminishing Trump’s impact on Bitcoin sentiment.
4. Global Economic Factors:
Beyond the U.S., international factors have also played a role. The Japanese market’s reaction to the Bank of Japan’s interest rate hike and the resulting yen strength have put Bitcoin at a near three-week low against the Japanese currency. Additionally, rising geopolitical tensions, such as the recent killing of a Hamas leader in Iran, have further dampened risk appetite globally.
Impact on Other Cryptocurrencies
XRP: XRP fell by 5.7%, reversing a recent rally sparked by unfounded rumors of a settlement between Ripple and the SEC.
Ether (ETH): The second-largest cryptocurrency by market cap fell 3.7% to $3,179.26.
Solana (SOL) and Cardano (ADA): SOL and ADA saw declines of 6.9% and 5.1%, respectively.
Dogecoin (DOGE): Among meme tokens, DOGE dropped 3.9%.
Market Outlook
Despite the Fed’s potential for a rate cut, which could typically benefit cryptocurrencies, Bitcoin and other crypto assets have struggled to maintain upward momentum. The ongoing global uncertainties and specific market dynamics are contributing to the broader bearish sentiment in the crypto space.
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