Bitcoin drops 4% to $61,000, witnesses second-worst weekly decline; What’s behind the plunge?

The cryptocurrency maintains a market cap of around $1.2 trillion. Despite the prevailing downturn, Bitcoin's open interest has experienced a slight uptick of 0.59 per cent, reaching a current valuation of $19.1 billion.

Vaamanaa Sethi
First Published24 Jun 2024, 06:55 PM IST
Bitcoin on June 24 plunged to  $61,000 level, fell over 4% amid Fed rate cut expectations.
Bitcoin on June 24 plunged to $61,000 level, fell over 4% amid Fed rate cut expectations.

World's biggest cryptocurrency Bitcoin witnessed a downturn of over 3 per cent on Monday, falling to $61,000 level. Losses are mounting in the crypto market following its second-worst weekly decline of 2024, driven by waning demand for Bitcoin exchange-traded funds and uncertainty surrounding monetary policy.

As of 11:44 a.m. on Monday in London, Bitcoin fell 4% to $61,153, marking its lowest point in over a month. The leading cryptocurrency by market value has been impacted by a six-day streak of outflows from dedicated US ETFs.

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The cryptocurrency maintains a market cap of around $1.2 trillion. Despite the prevailing downturn, Bitcoin's open interest has experienced a slight uptick of 0.59 per cent, reaching a current valuation of $19.1 billion.

“The crypto market is currently experiencing a downturn, leaving many individuals feeling confused and scared about their next steps. BTC is now approaching the critical level where many will give up this cycle. BTC is playing much the same role as gold did in the early days of banking. The current downfall is due to three major reasons such as minors selling btc to fuel their mining activities, Germany is selling 3b USD of bitcoin and Mt. Gox, the erstwhile crypto exchange announcing the bitcoin cash repayments in July," said Avinash Shekhar, CoFounder & CEO, Pi42.

What's behind bitcoin's downturn?

Recent market sentiment indicates that investors are adopting a cautious approach, refraining from aggressive moves due to various factors that are tempering their risk appetite. These factors have not only impacted the price of Bitcoin but have also overshadowed the prices of the entire cryptocurrency market.

Bitcoin's recent performance has been significantly influenced by uncertainty over Federal Reserve interest rate policies. Traders are wary of potential interest rate increases amid ongoing inflation worries. The Fed's forthcoming decisions, especially influenced by economic indicators such as the PCE price index, are crucial for market sentiment.

Also Read | Ether gets spot ETF approval from US regulator; experts predict volatility ahead

“Bitcoin has been struggling to maintain crucial support levels of late due to some bearish conditions at play. With a steep decrease in high ticket transactions and ETF outflows exceeding inflows yet again, the market sentiment has dampened. Most importantly the strengthening of the dollar index in the backdrop of US PMI reaching an optimistic value of 54.6 has investors biased towards the dollar and moving away from riskier assets. There has also been an influx of profit taking especially from derivatives trades, further dampening investor confidence,” said Rajagopal Menon, VP, WazirX.

Another important contributing factor behind Bitcoin's downturn is ETF outflows. A notable withdrawal of $545 million from U.S. Spot Bitcoin ETFs signals a change in investor sentiment towards digital assets. Institutional investors, wary of market volatility and regulatory uncertainties, are reallocating their positions in Bitcoin-related investment products.

 

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First Published:24 Jun 2024, 06:55 PM IST
HomeMarketsCryptocurrencyBitcoin drops 4% to $61,000, witnesses second-worst weekly decline; What’s behind the plunge?

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