Bitcoin prices have faced 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 occur 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 US unemployment rate for April will be announced on May 3, but expectations for a rate cut this year have significantly decreased.
This week, attention was drawn to concerning data from the US. Weaker-than-expected GDP data suggests a slowing economy, while high Core PCE figures indicate persistent inflation issues for the Federal Reserve. While there are concerns that the US could enter a stagflation scenario characterized by negative GDP growth and high inflation, this remains speculative at the moment.
Market sentiment has shifted, with expectations now pricing in only one rate cut for 2024, a 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 indicate a significant shift in the crypto world. Leading cryptocurrencies like Bitcoin and Ethereum are experiencing decreased volatility, signaling a major squeeze in the market. The long-awaited drop in Bitcoin’s volatility from 70% to 50% has led investors to reflect deeply.
However, it remains uncertain whether these declines are just a temporary pause or a permanent change in market sentiment. Ethereum’s increased downside skewness in risk returns to 13% has added to market uncertainty.
Attention is now focused on the launch of spot Bitcoin and Ethereum ETFs in Hong Kong this week. This move could 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 does not constitute investment advice. Investors should be aware of the high volatility and risk associated with cryptocurrencies and should conduct their own research.
