Bitcoin Price Falls Slightly Due to Strong Dollar Pressure
Bitcoin’s Decline Amidst Dollar Strength
Bitcoin price fell slightly on Wednesday due to pressure from a strong dollar, as investors became more uncertain about the path of U.S. interest rates ahead of key labor market data this week.
Impact of Risk Aversion on Bitcoin
Bitcoin dropped by 0.5% to $66,229.5 by 01:15 ET (05:15 GMT) as a broader decline in risk appetite, marked by a sharp fall in global stock markets, also weighed on the cryptocurrency. Investors shifted towards safe havens like the dollar and gold.
Market Sentiments and External Factors
The recent surge in the dollar to a 4-½ month high and the record highs of gold added to the pressure on Bitcoin. Additionally, risk appetite in Asian markets was dampened by a devastating earthquake in Taiwan, impacting Asian stocks and supporting the dollar’s stability.
Uncertainty Surrounding U.S. Government Actions
A potential mass sale event looms over Bitcoin investors as the U.S. government is reportedly mobilizing part of the 30.1K Bitcoins ($2.1 billion) recovered from the Silk Road marketplace. This move could introduce sell-side pressure on Bitcoin, affecting its price trajectory.
Challenges Ahead for Bitcoin
Bitcoin’s strong price rally in 2021, driven by U.S. approval of spot exchange-traded funds, faces challenges as capital inflows into these ETFs slow down. The prospect of higher U.S. interest rates poses further headwinds for Bitcoin, known to thrive in high-liquidity, high-speculation environments.
