Bitcoin Price Falls as Dollar Strengthens on Positive Economic Data
Bitcoin Price Decline
Bitcoin experienced a significant drop in early Asian trading due to new economic data in the U.S. boosting the dollar to its highest level in over four months. The flagship cryptocurrency fell over 4% in the last 24 hours to $66,495.8 as of 04:49 ET (08:49 GMT), breaking below the previous week’s stable range of $68,000 to $72,000.
Dollar Strength and Fed Rate Cuts
The U.S. dollar’s strength, measured by the Dollar Index, surpassed the 105 mark for the first time since mid-November, driven by an unexpected rise in ISM manufacturing PMI figures for March. This uptick challenges the likelihood of imminent Federal Reserve rate cuts, as it marks the first increase in factory activity since September 2022.
Market Reaction and Crypto Altcoins
The stronger dollar makes assets priced in dollars, like Bitcoin and gold, less appealing and more expensive, potentially reducing demand. This led to market-wide declines, with Bitcoin’s drop affecting crypto altcoins such as Ether, Cardano’s ADA, Solana’s SOL, and Polkadot’s DOT. The broader crypto market saw significant liquidations, with over $400 million in long positions being liquidated.
Market Volatility and Future Outlook
Market volatility is expected to continue, especially as Bitcoin approaches its halving in April. Despite these short-term fluctuations, the long-term outlook for crypto adoption remains positive. The total crypto market cap fell around 5.3% to $2.62 trillion during the same period, according to Coingecko data.
