The price of Bitcoin (BTC) has recently lost its upward momentum, dipping below $36,000. This deviation from the stock market's impressive performance, driven by lower-than-expected inflation figures, has left investors concerned.
Bitcoin's lackluster performance can be attributed to diminishing enthusiasm surrounding the pursuit of a BTC spot ETF. The narrow approval window for the recently identified Bitcoin spot ETF is closing, indicating that the US Securities and Exchange Commission (SEC) may extend the industry's waiting period for a decision.
In the past 24 hours, Bitcoin experienced one of its weakest showings this month, with its price dropping by as much as 3.7% to touch $35,300 at one point. While Bitcoin's price has stabilized somewhat, it remains under pressure, down 0.98% at $36,131.97 at the time of writing. However, the coin's trading volume has increased by 26% to $24,678,584,741.
This decline in Bitcoin's value is a knee-jerk reaction from Bitcoin enthusiasts, coinciding with the revelation that US inflation has decreased to 3.2%, the lowest level recorded this year. This positive economic indicator prompted Wall Street investors to go on a stock buying spree, as lower inflation suggests that the Federal Reserve may reconsider aggressive interest rate hikes.
As a result of this surge, the S&P 500, an index tracking 500 of the largest US stocks, rose by 1.8%, and the Nasdaq Composite saw a 2.3% increase. Additionally, the 10-year Treasury yield dropped by 4.4% or 20 basis points.
The optimism on Wall Street shifted investors' focus away from Bitcoin and the broader crypto market, leading to the decline in cryptocurrency prices.
However, experts believe that this drop in Bitcoin's price is temporary. Grayscale, in a recent report, suggested that low inflation and bond yields could be favorable for the crypto market in the future. The hypothesis is based on the possibility that interest rates will peak, and discussions surrounding a Bitcoin spot ETF will improve. Bloomberg analysts have projected a 90% probability of approval by January 24, and market leaders are optimistic that such approval could act as a catalyst for Bitcoin's price, potentially sparking the next bull market.
