Bitcoin is experiencing a significant decline, which is again fueling investor concerns. After approaching $66,000 last week, its price dropped to $62,501 this Tuesday, down 5.3%.
Catalysts of unexpected decline
This sudden decline stems from several key factors. First, statements by Jerome Powell, chairman of the US Federal Reserve System, dampened the market’s enthusiasm.
During a speech in Nashville on September 30, Powell tempered expectations for interest rate cuts, forecasting just two 25 basis point cuts by the end of the year.
This outlook caused an adjustment in market expectations. According to CME’s FedWatch Tool, the likelihood of a 50 basis point rate cut in November fell from 53% last Friday to 38.2% after Powell’s remarks.
In addition, escalating tensions in the Middle East have accentuated investor risk aversion and weighed on volatile assets such as Bitcoin.
A Bitcoin market that demonstrates its resilience
Despite this decline, several indicators suggest the underlying resilience of the Bitcoin market. Data from CryptoQuant reveals that the $63,000 level is the price realized by short-term holders, serving as support since mid-September.
In addition, capital inflows into Bitcoin ETFs remain significant, although declining. Bitcoin ETFs saw net inflows of $494.4 million last Friday, including $203.1 million for Ark Invest’s ARKB ETF and $123.6 million for Fidelity’s FBTC, according to Farside Investors.
Although Bitcoin is going through a period of volatility, many analysts maintain an optimistic long-term outlook. On-chain data suggests that investors continue to accumulate BTC by moving it from exchanges to private wallets, a behavior generally interpreted as a sign of continued confidence.
IntoTheBlock highlights another potentially bullish factor: the growing demand for Bitcoin in decentralized finance. Currently, 1% of the total Bitcoin supply is locked up in DeFi protocols, reducing available liquidity in spot markets and potentially putting upward pressure on prices.
In this uncertain economic climate, investors must remain vigilant. Bitcoin could experience more short-term swings before potentially returning to a long-term upward trajectory.
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I am passionate about Bitcoin, I love exploring the intricacies of blockchain and cryptocurrency and sharing my discoveries with the community. My dream is to live in a world where privacy and financial freedom are guaranteed for everyone, and I firmly believe that Bitcoin is the tool that can make this possible.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.