Bitcoin's Price Drop and Market Concerns Ahead of US Inflation Data and Federal Reserve Announcement

The price of Bitcoin (BTC) recently fell by more than 3%, signaling traders’ apprehension prior to the release of US inflation data and the upcoming Federal Reserve monetary policy announcement. Bitcoin, the leading cryptocurrency, slumped to $67,000, marking a one-week low. At the same time, other major cryptocurrencies like Ether and Dogecoin also experienced significant dips.

Revisiting Bitcoin's Performance

Boosted by substantial influx from US Spot crypto exchange-traded funds (ETFs), Bitcoin soared to its all-time high (ATH) of $73,798 in March. However, surpassing this record has proven challenging in subsequent periods.

The imminent US inflation data release and the Federal Reserve’s policy outlook set for Wednesday could enhance concerns regarding sustained high-interest rates, potentially posing a hurdle for the cryptocurrency market.

Experts assert that in the crypto landscape, absence of positive news can lead to adverse outcomes. The market tends to rely heavily on bullish news for sustainability, and in its absence, a downward trend becomes prevalent.

Market Watch and Correlation Analysis

Global markets are gearing up for the Federal Reserve's interest rate decision and crucial US inflation statistics. Bitcoin investors, in particular, are on high alert for potential market volatility.

A 30-day correlation between Bitcoin and the US 10-year Treasury yield currently stands at minus 53, one of the most negative readings since 2010, indicating an exceptional inverse relationship between Bitcoin movements and the benchmark bond yield.

ETF Scenario and Market Trends

Over the past 90 days, Bitcoin's price has depreciated by 9%, signaling that the cryptocurrency may not be benefiting from ETF performance as expected. Interestingly, despite this downturn, Bitcoin witnessed an 11% upsurge in the last 30 days, suggesting a potential influx into ETFs during that period.

Since their inception in January, Bitcoin ETFs have attracted a net inflow of $15.6 billion. Nevertheless, recent data revealed a withdrawal of $65 million on Monday, ending a 19-day streak of consecutive inflows.

Current Bitcoin Status and Trading Dynamics

Currently, Bitcoin is being traded at an average price of $67,081 with a 24-hour trading volume escalation of 98% to $32 billion.

The imminent release of US inflation data and the Federal Reserve’s policy announcement, expected to be disclosed in close succession on Wednesday, could wield significant influence on the bond market. According to correlation analyses, Bitcoin may witness fluctuations in response to movements in the Treasury market.