Key Reason Why Bitcoin (BTC) Fell to One-Week Low: Details

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As an experienced financial analyst, I closely follow the trends in the cryptocurrency market, particularly Bitcoin. The anticipation surrounding the Federal Reserve’s interest rate decision this week has created a sense of unease among investors and speculators alike. With expectations leaning towards no change in rates, the potential implications for digital assets such as Bitcoin remain uncertain.

On Monday, Bitcoin along with the wider cryptocurrency market experienced a decline. This drop came as investors and speculators prepared for a significant Federal Reserve meeting scheduled for later in the week.

Excitement built among market participants as they waited for the meeting, which could signal longer-term increases in interest rates. Preparations were made to minimize potential damage to digital assets in anticipation of these rate hikes.

As a crypto investor, I experienced a significant dip in the value of my Bitcoin holdings earlier today, with the digital currency reaching a one-week low of $61,928 during morning trading. However, the market showed some signs of recovery by midday, and at the time of reporting, Bitcoin was down approximately 2% to trade at $62,387.

The desire for around a dozen Bitcoin ETFs based in the U.S. is still relatively subdued. Bitcoin’s growth rate towards its 2024 target has decelerated significantly, dropping from over 70% to approximately 47%, following its record-breaking price of nearly $74,000 in mid-March.

This week, it’s anticipated that the Federal Reserve will make an announcement concerning interest rates on May 1, with a high probability of approximately 96% for maintaining current rates unchanged. Meanwhile, on May 3, the U.S. is scheduled to publish its April unemployment rate data. Additionally, recent trends indicate a decreasing likelihood of a U.S. interest rate reduction in the year ahead.

This week, the Federal Reserve is set to announce its decision regarding interest rates on May 1, with a high likelihood of 95.6% that no change will be made. Moreover, the U.S. Department of Labor will publish the unemployment rate for April on May 3. Anticipation for an interest rate reduction in the U.S. throughout this year remains present.

— Wu Blockchain (@WuBlockchain) April 29, 2024

Before the Federal Reserve’s upcoming meeting, there have been varied opinions among investors regarding the expected direction of interest rates and how it might influence cryptocurrencies like Bitcoin. The general consensus is that rising interest rates may act as a deterrent for investments in riskier assets, including digital currencies.

As the Federal Reserve gathers to share its views on interest rates and monetary policy, investors will pay close attention and decipher the central bank’s statements for hints about its intentions. Indications of a more aggressive stance on interest rates could cause unease in digital asset markets, while a more accommodative tone might bring relief to investors seeking calmness.

Expectations remain on BTC price post-halving

This month marked the occurrence of Bitcoin’s fourth halving, leading to a 50% reduction in the rate at which new bitcoins are created and entered into circulation. Consequently, scarcity increased as the issuance became less frequent. Given the significance and widespread attention surrounding this event, it is only natural that conversations about its potential effects on Bitcoin’s price dynamics have intensified.

Approximately 19.68 million Bitcoins have been mined and distributed so far, accounting for approximately 93.75% of the total supply of 21 million Bitcoins. This means that around 1.312 million Bitcoins are yet to be mined and will be issued over the course of about 126 years. Half of this remaining amount, or roughly 656,000 Bitcoins, is expected to be mined between the fourth and fifth halvings.

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2024-04-29 14:14