Bitcoin (BTC) lost ground last week as investors grew more cautious about rising interest rates in the United States. The world’s largest cryptocurrency had been on an upward trend since news broke that BlackRock, the world’s largest asset manager, had filed to list a spot Bitcoin exchange-traded fund (ETF) in the US. However, BTC has been trading in a range between $30,000 and $31,000 for the past two weeks, and the recent sell-off suggests that investors are becoming more concerned about the potential impact of higher interest rates on the cryptocurrency market.
Macro back in focus
The news of the BlackRock ETF filing had a positive impact on Bitcoin prices in the short term, but the focus of traders has now shifted back to macroeconomic news,
At the Federal Reserve’s last meeting, Chair Jerome Powell said that the central bank would pause its rate hiking cycle to “assess additional information and its implications for monetary policy.” However, new data showing that hourly earnings in the US came in higher than expected has increased the risk that the Fed will have to do more to cool the economy. This could have a negative impact on Bitcoin and other risk assets, as higher interest rates make these assets less attractive to investors.
Market pricing in new rate hike
The market is now fully expecting the Federal Reserve to raise interest rates by 25 basis points in July, with a 40% chance of another hike by the end of the year. This is likely to have a negative impact on Bitcoin, as risk assets tend to suffer when rates rise.
. The recent jump in interest rates is only making things worse for them.
Stephane Ouellette, CEO of FRNT Financial Inc., agreed that risk assets will suffer when rates rise, and Bitcoin will be particularly vulnerable. However, he also pointed out that Bitcoin has a large number of long-term holders who are less sensitive to macro factors.
The Fed’s next rate announcement is expected on July 26.
