- Bitcoin (BTC) has experienced a significant downturn ahead of the U.S. inflation data release and the upcoming Federal Reserve meeting.
- In light of this downturn, U.S. spot Bitcoin Exchange Traded Funds (ETFs) have recorded their first net outflow in 19 trading days.
- According to Cointelegraph Markets Pro, Bitcoin has seen a 2.3% drop over the past 24 hours, marking its lowest point in a week and exerting selling pressure on altcoins such as ETH, SOL, and DOGE.
This article explores the recent declines in Bitcoin and the implications of the Fed meeting and inflation data on the crypto market.
Shift in Spot BTC ETFs
The recent drop in Bitcoin’s value was closely followed by notable net outflows from U.S. spot Bitcoin ETFs. On June 10, 11 spot Bitcoin ETFs in the U.S. reported a collective net outflow of $64.9 million, marking the first net outflow in a month. Grayscale Bitcoin Trust (GBTC) led the exodus with a $39.5 million net outflow, trailed by Invesco Galaxy Bitcoin ETF (BTCO) with $20.5 million, and Fidelity Wise Origin Bitcoin Fund (FBTC) with a smaller $3 million outflow.
Inflation Projections and Market Sentiment
Analysts from Morningstar predict that inflation in the U.S. will increase by 0.1% after a 0.5% rise in April, pushing the annual rate to 3.4%. Core inflation is expected to mimic April’s 0.3% increase in May. This inflation outlook has influenced market sentiment, contributing to the recent downturn in Bitcoin and other cryptocurrencies.
Implications of the Federal Reserve Meeting
The cryptocurrency market is also on edge as the Federal Reserve’s two-day Federal Open Market Committee (FOMC) meeting is set to begin. Investment research firm Zacks anticipates that the Fed will maintain its current interest rate target of 5.25% to 5.5%, as there appears to be no likelihood of a rate cut. This policy stance reflects the Fed’s strategy to manage inflation, which has seen significant fluctuations in recent months.
Market Reaction and Future Outlook
The immediate market reaction has been one of caution, with significant selling pressure on Bitcoin and major altcoins. Ethereum (ETH) dropped to $3,552, Solana (SOL) fell to $154, and Dogecoin (DOGE) slid to $0.14. Investors are closely watching for further cues from the Fed’s policy announcements and inflation data, as these will likely set the tone for the crypto market in the near term.
Conclusion
In summary, the crypto market has been highly reactive to macroeconomic signals such as U.S. inflation data and Federal Reserve policy announcements. The recent net outflows from Bitcoin ETFs reflect a broader market caution. Investors should stay informed and consider these economic indicators when making investment decisions.
