Mar 27 2024: Bitcoin’s price remained relatively unchanged on Wednesday, facing resistance around the $70,000 mark due to the persistent strength of the dollar and cautious sentiment towards cryptocurrencies reflected in slowing capital flows.
Over the past 24 hours, Bitcoin experienced a slight decline of 0.6%, reaching $70,162.1 by 01:01 ET (05:01 GMT), after briefly touching $71,000 the previous day.
The strength of the dollar continued to limit further gains in Bitcoin, with traders showing a preference for the greenback as they awaited more signals regarding U.S. interest rates. The dollar index remained close to a one-month high on Wednesday, driven by recent dovish signals from central banks like the Swiss National Bank and the Bank of England.
Investors are particularly focused on the PCE price index data, scheduled for release later in the week, which is the Federal Reserve’s preferred gauge of inflation. Any indications of persistent inflation could lead to a more hawkish outlook for the Fed, potentially delaying its plans to cut interest rates.
Key Fed officials, including Chair Jerome Powell and FOMC member Mary Daly, are also expected to provide further insights on interest rates, adding to market cues.
The prospect of higher U.S. interest rates in the near term prompted traders to opt for safer investments in the dollar over Bitcoin, especially considering the historical pressure Bitcoin faces in a high-rate environment. Bitcoin experienced significant losses in late-2022 when interest rates rose, dropping to lows of around $15,000.
Although Bitcoin has recovered nearly five-fold from its 2022 lows and recently reached record highs above $73,000, recent data from CoinShares indicated a slowdown in capital flows into Bitcoin ETFs. Furthermore, sustained outflows from the Grayscale Bitcoin Trust (GBTC) ETF added selling pressure on the token.
Bitcoin ETFs initially saw significant inflows following the approval of spot ETFs, but these inflows have tapered off in recent weeks amid growing investor caution related to uncertainty surrounding U.S. interest rates.
