Mar 22 2024: Bitcoin’s price weakened during Asian trade on Friday due to the strength of the dollar, which rebounded sharply to three-week highs, causing the world’s largest cryptocurrency to drop below $65,000.
As of 01:20 ET (05:20 GMT), Bitcoin traded down 1.4% at $66,082.0. Despite experiencing significant consolidation from record highs over the past seven days, it remained steady above weekly lows.
The primary pressure on crypto markets came from the strength of the dollar, driven by an unexpected interest rate cut from the Swiss National Bank and dovish signals from the Bank of England. Traders favored the greenback due to its status as one of the few high-yielding, low-risk currencies, leading the dollar index to surge to a three-week high of over 104 points.
Bitcoin Price Falls as Dollar Strengthens and Profit-Taking Continues
The world’s largest cryptocurrency was trading down about 5% from last Friday’s levels, facing pressure from the strong dollar and sustained profit-taking.
Last week, Bitcoin surged to record highs above $73,000, benefiting from strong capital flows into recently-approved spot exchange-traded funds in U.S. markets. These funds provided significant support for Bitcoin in 2024, with the token trading up approximately 50% for the year.
Bitcoin remained well above the lows hit during the week, when anticipation of a Federal Reserve meeting drove the token as low as $60,000.
However, the near-term outlook for Bitcoin was clouded by the strength of the dollar, as signs of resilience in the U.S. economy compared to its peers in the developed world made the greenback appear particularly attractive. The Federal Reserve may also lag behind most of its central bank peers in cutting interest rates.
Nevertheless, with the Fed maintaining its outlook for at least three interest rate cuts in 2024, the dollar is expected to eventually decline. Markets are still positioned for a 25 basis point cut in June, according to the CME Fedwatch tool.
This scenario is favorable for Bitcoin, given that its highly speculative nature thrives in a low-rate environment.
Additionally, an upcoming halving event, expected to reduce the generation of new Bitcoin by 50%, is anticipated to push up prices in 2024. The halving is expected to occur by April.
“ETF activity may begin to slightly fade away and make room for the highly-anticipated halving. With the way ETF activity impacts Bitcoin now, it is this rewards-halving event that will determine Bitcoin’s next course of price action,” said Elitsa Taskova, Chief Product Officer at Nexo,