Fed worries, ETF sentiment weakens, tests $59,000

Investing.com – Bitcoin prices fell further on Wednesday, briefly falling below a key support level, as expectations for the Federal Reserve meeting kept traders from investing in speculative assets such as cryptocurrencies.

Recent data showing continued outflows from Bitcoin investment products, especially exchange-traded funds (ETFs), has also weighed on market sentiment, while the launch of a new spot cryptocurrency ETF in Hong Kong has provided little encouragement.

It was down 5% in the past 24 hours to $60,247.5 as of 00:32 ET (04:32 GMT). The coin has dropped to a low of 59,590.2.

Fed expects traders to prefer U.S. dollar to Bitcoin

Bitcoin's decline coincided with Tuesday's sharp gains, which pushed the U.S. dollar near a six-month high.

Traders were mostly biased against the dollar ahead of Wednesday's meeting, with the central bank widely expected to keep interest rates steady.

But Chairman Powell is likely to take a hawkish tone, especially after several inflation data beat expectations.

Anticipation of this situation has led traders to gradually rule out expectations that the Federal Reserve will cut interest rates early. The central bank is now expected to start cutting interest rates in September, if at all.

Given that the Bitcoin industry typically thrives in low-interest-rate, high-liquidity environments, a prolonged rise in U.S. interest rates does not bode well for Bitcoin and the broader crypto industry.

The concept has also been a key driver of capital outflows from cryptocurrency investment products in recent weeks, as hype for spot Bitcoin ETFs has waned in the face of longer-term higher interest rates.

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Cryptocurrency Prices Today: Altcoins Track Bitcoin Losses

Broader cryptocurrency prices also retreated as market sentiment remained subdued. The world's second-largest cryptocurrency fell 5.1% to $3,009.19, while Bitcoin and Bitcoin fell 2.6% and 7.8% respectively.

On the regulatory front, disgraced Binance founder Changpeng Zhao was sentenced to four months in prison after pleading guilty to violating U.S. anti-money laundering laws.

Zhao was once considered the most powerful man in the cryptocurrency space and the second major cryptocurrency CEO to be jailed, following FTX's Sam Bankman-Fried in 2023. Much lighter.

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