Bitcoin Faces Worst Month Since FTX Crash With ETF Demand Cooling

The prospect of higher-for-longer interest rates is weighing on crypto, underlined by deepening Bitcoin losses after the token’s worst monthly drop since the collapse of Sam Bankman-Fried’s FTX empire in November 2022.

The largest digital asset slumped almost 16% in April as a mania for US spot-Bitcoin exchange-traded funds flatlined after earlier lifting the token to a record high of almost $74,000 in March. Losses continued on Wednesday, with Bitcoin dropping as much as 5.6%.

Crypto prices rebounded briefly, along with equities, on Wednesday as the Federal Reserve said it will shrink its balance sheet at a slower pace to ease strains in money markets and Chair Jerome Powell downplayed the possibility of rate hikes. However, Bitcoin and stocks resumed declines as Powell made it clear that higher-than-expected inflation data has eroded the confidence needed to lower borrowing costs.

“I do think it’s a little bit more dovish than the market was expecting the last few days, since the market was afraid of the Fed turning hawkish today,” said Youwei Yang, chief economist and vice president of crypto miner BIT Mining Ltd. Still, he added, the drop in Bitcoin from $73,000 to current levels around $57,000 showed some worry by traders who “may see some risk in the global macro environment that the Fed or general investors are not seeing yet.”