Bitcoin Drops to 21-Month Low as Rate Fears and Strategy Concerns Bite
By Aboki Forex —
Bitcoin fell to its lowest level since September 2024, hitting $57,742 in Asian trading on Wednesday. The 1.5% drop came as higher interest rate expectations and worries about a major corporate buyer weighed on sentiment.
Hawkish comments from US Federal Reserve policymakers have fuelled expectations for higher rates. This pushes capital away from assets like cryptocurrencies that do not pay a yield. Investors pulled more than $4 billion from US-listed Bitcoin exchange-traded funds in June, the largest monthly outflow since they launched two years ago.
Tony Sycamore, an analyst at IG Australia, said Bitcoin faces growing headwinds from shifting Fed rate expectations and a stronger US dollar. He added that a US nonfarm payrolls report due later this week could add more pressure if it reinforces a hawkish stance from the Fed.
Beyond rate fears, sentiment has been hit by concerns over Strategy Inc., one of the largest corporate holders of Bitcoin. Investors initially welcomed Michael Saylor's financing overhaul, which promised stock buybacks and a larger cash reserve. But the focus quickly shifted to the company's new flexibility to sell Bitcoin and prioritise balance-sheet management over relentless buying.
Bitcoin has now fallen more than 50% from its record high above $126,000 in October last year. It is also trading below its 200-week moving average, a technical signal that often points to a prolonged bear market.
At his first press conference as Fed chairman last month, Kevin Warsh made clear the central bank will not tolerate high inflation. This spurred expectations for higher rates and boosted the US dollar. Other Fed officials have also signalled the possibility of tighter policy. Federal Reserve Bank of Cleveland President Beth Hammack told CNBC on Tuesday that the central bank may need to raise rates to bring inflation down to its 2% target.