Top

News

Bitcoin Rally Falters Amid Fed Policy Outlook and ETF Uncertainty

2024.01.04

 

Key Takeaways

  • Bitcoin’s price drops sharply, losing its new year gains amid concerns over the Federal Reserve’s monetary policy and ETF approval by the SEC.
  • Other cryptocurrencies also experience significant declines, with Ether, Solana, and Ripple’s XRP among the notable losers.

Sudden Reversal in Bitcoin’s Fortunes

Bitcoin’s impressive start to 2024 hit a snag, with its price plummeting to $42,685.85, marking a sharp reversal from its recent surge to over $45,000. The downturn, also mirrored by Ether and other cryptocurrencies like Solana, XRP, Litecoin, and Dogecoin, reflects growing investor anxiety over the Federal Reserve’s interest rate decisions and the uncertain fate of the anticipated Bitcoin ETF approval.

ETF Uncertainty and Market Sentiment

Concerns about the SEC’s decision not to approve a Bitcoin ETF this year have caused unease among investors, leading to the unwinding of leveraged positions. Analysts like Noelle Acheson and Gautam Chhugani of Bernstein, however, see these dips as buying opportunities, expecting a significant market rebound once the ETF approval materializes.

Crypto Market’s Overheated State

Darius Tabatabai from Vertex Protocol views the current market correction as a healthy response to an overheated crypto market. This sentiment is echoed by the rise in bitcoin funding rates observed in late December, which reached their highest level since 2021.

Federal Reserve’s Policy and Macro Influences

The Federal Reserve’s recent comments, particularly from Richmond Fed President Thomas Barkin, highlight the ongoing uncertainty in monetary policy. The Fed’s stance on maintaining a restrictive policy for some time, as shown in recent meeting minutes, has contributed to the shift in market dynamics, affecting not just cryptocurrencies but also stocks, bonds, and gold.

Bitcoin’s January Performance Trends

Historically, January has been a mixed bag for Bitcoin, with the cryptocurrency only seeing positive month-end results in five of the last eleven years. After concluding 2023 with a 157% surge, Bitcoin’s current consolidation phase and recent decline suggest a volatile start to the new year.

 


More content from CoinRank:

Bitcoin Hits $45,000 Amid ETF Optimism and Geopolitical Tensions

Bitcoin’s Bullish Forecast for 2024: Analysts Predict Surge

Bitcoin ETF Approval Looms: Market Anticipates Shifts in Crypto Landscape

 

Looking for the latest scoop and cool insights from CoinRank? Hit up our Twitter and stay in the loop with all our fresh stories!

 

CoinW