Bitcoin saw a notable decline for the third consecutive day on Wednesday, marking its poorest monthly performance in April since late 2022.
This decline coincides with investors diverting their attention from cryptocurrencies due to the impending interest rate decision by the Federal Reserve.
The most widely traded cryptocurrency experienced a nearly 16 percent drop in April as investors capitalized on profits from a recent surge.
Bitcoin had reached record highs, topping $70,000, but the recent slide has taken the price to $57,055, a 4.7 per cent drop and its lowest point since late February.
Ether, the second-largest cryptocurrency by market cap, also saw a decline, falling 3.6 per cent to $2,857, its weakest level since February.
The sharp downturn has pushed bitcoin into bear market territory, with its current price sitting 22 per cent below its March peak of $73,803.
Despite this, Bitcoin has still achieved a 35 per cent increase so far in 2024 and has doubled its value compared to the same time last year.
This surge in value was largely driven by significant investments in newly launched exchange-traded funds (ETFs) at the beginning of the year.
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According to Matteo Greco, a research analyst at Fineqia, the recent decline in bitcoin’s price is due to profit-taking by investors who entered the market during the downturns of 2022 and 2023.
Additionally, ETF investors, who saw their shares appreciate significantly in early 2024, also contributed to the sell-off as they locked in profits.
Looking at the broader economic landscape, the Federal Reserve is not expected to change interest rates later this week.
However, a growing consensus among investors suggests that the central bank may refrain from cutting rates altogether in 2024.
This uncertainty has cast a shadow over interest rate-sensitive assets, including cryptocurrencies, emerging market stocks, bonds, and even commodities. Investors are adjusting their portfolios accordingly.
The 10 largest U.S. spot bitcoin ETFs have seen their biggest weekly outflow since their inception earlier this year, highlighting the impact of shifting investor sentiment on the cryptocurrency market.
As the market reacts to both macroeconomic factors and investor behavior, the coming days will be crucial in determining whether this downtrend continues or stabilizes.
