Bitcoin (BTC) falls to $57,000 ahead of Fed decision

Bitcoin fell to its lowest level in more than two months on Wednesday as investors eyed the Federal Reserve’s upcoming interest rate decision.

The cryptocurrency fell as much as 7% to $56,526.00, its lowest level since February 27, according to CoinMetrics. It was last down about 4% at $57,413.94.

Bitcoin fell from recent highs amid broader risk-off sentiment. It dropped about 10% over the week and ended on Tuesday.

Investors are focused on the Federal Reserve’s upcoming interest rate decision as it wraps up its two-day policy meeting Wednesday afternoon. The central bank is expected to keep interest rates stable, according to forecasts Fed futures price data. Investors are looking to Fed Chairman Jerome Powell for clues about what needs to happen before rates can be cut.

Jeff Kendrick, head of digital asset research at Standard Chartered, said in a note published Wednesday that Bitcoin’s fall below $60,000 has “now reopened the path to the 50-52K range.”

“The driving force appears to be a combination of cryptocurrency-specific and broader macros,” Kendrick said.

He noted that the main factors affecting the token were five consecutive days of outflows from US spot Bitcoin exchange-traded funds, as well as a deteriorating macroeconomic background and deteriorating market liquidity.

Kendrick added that the reaction to the launch of spot Bitcoin ETFs in Hong Kong earlier this week was “poor”, focusing on the ETF’s small first-day turnover of millions of dollars, despite the ETF’s net asset positions being strong. .

“Liquidity matters when it matters, of course, but with strong U.S. inflation data and less likelihood of a Fed rate cut, it matters now,” Kendrick said in a note.

The fall in prices in cryptocurrency markets also came a day after former Binance CEO Changpeng Zhao was sentenced to four months in prison on money laundering charges.