Bitcoin prices are facing selling pressure due to expectations that the Federal Reserve (FED) will not change interest rates amidst high inflation and weak GDP pressures. Over the weekend, the cryptocurrency market experienced widespread pressure, with Bitcoin’s price falling below $62,500 and undergoing a 2.2% correction. Altcoins, on the other hand, faced even greater selling pressure, with corrections ranging from 4% to 10% among the top ten altcoins.
Looking ahead, significant economic developments are expected to take place this week, starting with the FED’s interest rate decision on May 1. Analysts predict a 95.6% likelihood that interest rates will remain unchanged. Additionally, the U.S. unemployment rate for April will be announced on May 3. However, expectations for a rate cut in the U.S. this year have significantly decreased.
This week, attention was drawn to concerning data from the U.S. that indicates a slowing economy and persistent inflation issues for the Federal Reserve. While there are concerns about the possibility of a stagflation scenario, characterized by negative GDP growth and high inflation, this remains speculative at the moment.
The change in market sentiment has resulted in expectations for only one rate cut in 2024, a significant departure from the initial predictions of seven cuts at the beginning of the year and three in March. However, the uncertainty surrounding the FED’s interest rate policy is causing selling pressure in the cryptocurrency market, particularly affecting Bitcoin prices.
Recent market updates have signaled a significant shift in the crypto world, with leading cryptocurrencies like Bitcoin and Ethereum experiencing a decrease in volatility. This decrease, from 70% to 50% in Bitcoin’s case, has prompted investors to reflect on the market. However, it remains unclear whether these declines are temporary or indicative of a permanent change in market sentiment. Ethereum’s risk returns have shown increased downside skewness of 13%, adding to market uncertainty.
All eyes are now on the launch of spot Bitcoin and Ethereum exchange-traded funds (ETFs) in Hong Kong this week. This move has the potential to attract institutional capital from Asia to the crypto space and create new momentum in the market. If these ETFs prove successful, it is expected that confidence in cryptocurrencies will increase, leading to more institutional investors entering the market.
Disclaimer: The information provided in this article should not be considered as investment advice. Investors should be aware that cryptocurrencies are highly volatile and carry inherent risks. It is recommended to conduct thorough research before making any investment decisions.
