Bitcoin price moved little on Wednesday, as a rebound in the world’s largest cryptocurrency was hampered by persistent strength in the dollar, while recent data showing slowing capital flows reflected some hesitancy towards crypto.
Bitcoin fell 0.6% over the past 24 hours to $70,162.1 by 01:01 ET (05:01 GMT). It had risen as far as $71,000 on Tuesday.
Bitcoin price capped by strong dollar, more rate cues awaited Strength in the greenback limited any further gains in Bitcoin, as traders remained largely biased towards the dollar ahead of more signals on U.S. interest rates. The dollar index remained in sight of a one-month high on Wednesday.
Recent dovish signals from the Swiss National Bank and the Bank of England saw traders largely favor the greenback as the only high-yielding, low-risk currency, at least until the Federal Reserve begins cutting interest rates.
PCE price index data- the Fed’s preferred inflation gauge, is set to offer more cues on that front later this week. Any signs of sticky inflation could factor into a more hawkish outlook for the Fed, presenting potential delays in its plans to begin cutting interest rates.
Key Fed officials- Chair Jerome Powell and FOMC member Mary Daly- are also expected to speak later this week, potentially offering up more cues on interest rates.
The prospect of higher U.S. interest rates, at least in the interim, saw traders prefer safer trades into the dollar over Bitcoin, especially given that the cryptocurrency tends to come under pressure from a high-rate environment. Rising interest rates through 2022 sparked steep losses in Bitcoin, with the token sliding to lows of around $15,000 in late-2022.
The world’s biggest cryptocurrency had since staged an a nearly five-fold recovery from 2022 lows, and recently clocked record highs of over $73,000. A bulk of Bitcoin’s recent gains were driven by the U.S. approval of exchange-traded funds that directly track the token’s price.
But recent data from digital assets manager CoinShares showed that capital flows into Bitcoin ETFs slowed in recent weeks, while sustained outflows from the Grayscale Bitcoin Trust (BTC) (NYSE:GBTC) ETF applied some selling pressure on the token.
Bitcoin ETFs saw seven stellar weeks of outsized inflows, as the recent approval of spot ETFs drove traders en-masse into the token. But these inflows slowed in the past week, especially as investor sentiment grew more skittish amid uncertainty over U.S. interest rates.
