Bitcoin Price Faces Pressure Amid Strong Dollar and Market Uncertainty
Pressure on Bitcoin due to Strong Dollar
Bitcoin saw a slight decline on Wednesday, primarily influenced by the strength of the U.S. dollar as investors awaited crucial labor market data, causing uncertainty over the trajectory of U.S. interest rates.
The price of the world’s largest cryptocurrency dropped by 0.5% to $66,229.5 by 01:15 ET (05:15 GMT).
Global Market Instability and Safe-Haven Preference
Bitcoin faced additional pressure due to a broader decline in risk appetite, evidenced by a significant drop in global stock markets. Investors sought refuge in safe-haven assets like the dollar and gold.
Amidst these shifts, the greenback surged to a 4-½ month high, while gold prices reached record highs.
Impact of External Factors on Market Sentiment
The earthquake in Taiwan further impacted market sentiment, particularly in Asian markets, where stocks traded negatively. This event contributed to the dollar maintaining its strength after recent gains.
Potential Sell-off and Government Involvement
Adding to the apprehension among Bitcoin investors was the anticipation of a potential mass sell-off. Reports indicated that the U.S. government was preparing to mobilize part of the 30.1K Bitcoins ($2.1 billion) recovered from the Silk Road marketplace.
Crypto influencer ZachXBT highlighted on social media platform X that an address linked to the U.S. government had transferred $139 million worth of Bitcoin to a Coinbase deposit address. This move hinted at the possibility of selling the tokens on the open market, generating sell-side pressure on Bitcoin.
Market Outlook and Influencing Factors
Bitcoin’s remarkable price surge earlier this year, reaching a record high above $73,000, was primarily fueled by the approval of spot exchange-traded funds (ETFs) in the U.S.
However, recent trends have shown a slowdown in capital inflows into these ETFs, potentially signaling more weakness in Bitcoin prices.
Moreover, the prospect of prolonged high U.S. interest rates poses further challenges for Bitcoin, as the token typically thrives in environments characterized by high liquidity and speculation.
