Bitcoin touched a one-month low as outflows from digital-asset investment products and the prospect of higher-for-longer US borrowing costs sapped the cryptocurrency market.
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.
Bitcoin sank to a two-week low before paring losses as demand for dedicated US exchange-traded funds dries up and investors question the Federal Reserve’s scope to lower interest rates quickly.
Bitcoin extended a retreat from its latest record high amid an intensifying debate about whether the bull run in cryptocurrencies is evidence of speculative froth in global markets.
Bitcoin price swings are becoming more intense following the digital asset’s run to a record high, and a key question now is how investors in US exchange-traded funds for the cryptocurrency will react.
Bitcoin is flirting with a winning run last seen a year ago, aided by the record-breaking debut of US exchange-traded funds for the token.
The Bitcoin exchange-traded funds started by BlackRock Inc. and Fidelity Investments are gaining a liquidity edge over a larger rival from Grayscale Investments LLC, according to JPMorgan Chase & Co. strategists.
Bitcoin rose past $41,000 amid a slowdown in outflows from the $20 billion Grayscale Bitcoin Trust that strategists said may help to stanch a two-week slump in the token.
Bitcoin traded near $42,000 after a turbulent stretch that lopped almost 8% from the largest digital asset and stirred predictions of more volatility heading into year-end.
A brief 10% surge in Bitcoin gave traders a glimpse into the possible impact of a looming US Securities & Exchange Commission decision on whether to allow exchange-traded funds that invest directly in the cryptocurrency.
Grayscale Investments LLC, the largest crypto asset manager, said the US Securities and Exchange Commission acted arbitrarily earlier this year in rebuffing a bid to convert its $12 billion spot Bitcoin trust into an exchange-traded fund.
Cryptocurrencies suffered a sharp selloff as global markets retreated after US Federal Reserve officials reiterated their resolve to keep raising interest rates until inflation is contained.
