Bitcoin (BTC) experienced a sharp downturn on Tuesday, with prices plummeting nearly 5% to touch lows of $66,000. This price correction comes as the broader cryptocurrency market braces for potential volatility ahead of this week’s Federal Open Market Committee (FOMC) meeting. Let’s dive into what triggered this price drop and what to expect as we approach the FOMC decision.
Bitcoin Price Retreats From $72K Highs
After briefly reaching highs of $71,974 last Friday, Bitcoin’s price trajectory reversed, culminating in a fall to $66,018 on Coinbase. This dip effectively erased the gains from the previous bullish momentum. According to CoinStats data, Bitcoin was trading nearly 5% lower over the past 24 hours and showed a 6% decrease for the week at the time of reporting.
Why the Sudden Bitcoin Price Drop?
Several factors appear to be contributing to Bitcoin’s recent price weakness:
- End of Bitcoin ETF Inflow Streak: Spot Bitcoin ETFs, which had been a significant driver of positive sentiment, experienced net outflows of approximately $65 million on Monday. This snapped a 19-day streak of net inflows, suggesting a potential shift in investor appetite, at least temporarily.
- Large Dormant Wallet Activity: A Bitcoin wallet that had been inactive for over five years suddenly became active, transferring 8,000 BTC, valued at over $535 million, to various addresses, including the Binance exchange. Data from Lookonchain indicates this wallet received these 8,000 BTC back on December 6, 2018, when Bitcoin was priced at $3,810. Such large movements can sometimes create selling pressure in the market.
A dormant whale woke up after 5.5 years and transferred 8,000 #BTC($535M) to multiple new addresses and @binance just now.
The whale received 8,000 $BTC ($30.5M) on Dec 6, 2018, when the price was $3,810.https://twitter.com/lookonchain/status/1800532759318053234 pic.twitter.com/jyzLDo3CPo
— Lookonchain (@lookonchain) June 11, 2024
FOMC and CPI Data Loom Large
The overarching sentiment in the market appears to be risk-averse as investors keenly await key macroeconomic data releases this week, most notably the Consumer Price Index (CPI) and the FOMC meeting outcomes. The FOMC meeting is particularly significant as it will include the release of the ‘Dot Plot,’ which provides insights into the Federal Reserve’s interest rate expectations for the remainder of 2024 and beyond.
Analysts at QCP Capital, a prominent digital asset trading firm, highlighted this risk-off mood, stating, “Markets are risk-off mode ahead of CPI and FOMC tomorrow. This month’s FOMC will also release the Dot Plot, which informs the market how many cuts the Fed anticipates for the rest of 2024.”
Markets are risk-off mode ahead of CPI and FOMC tomorrow. This month’s FOMC will also release the Dot Plot, which informs the market how many cuts the Fed anticipates for the rest of 2024.
— QCP Capital (@QCPgroup) June 11, 2024
Is FOMC a Historically Bullish Catalyst for Bitcoin?
Despite the current price dip and cautious sentiment, some analysts suggest that FOMC meetings have historically presented buying opportunities for Bitcoin. Pseudonymous crypto analysts Moustache and Max point to patterns indicating potential bullish reversals following FOMC events.
Crypto trader Moustache noted a potential bullish inverse head & shoulders pattern forming for Bitcoin, stating, “FOMC tomorrow and $BTC forms a bullish inverse head & shoulders pattern here. The past FOMC meetings have already marked the low of the left shoulder + head. Right shoulder next?”
$FOMC tomorrow and $BTC forms a bullish inverse head & shoulders pattern here.
The past FOMC meetings have already marked the low of the left shoulder + head.
Right shoulder next? 🧐 pic.twitter.com/8w8Pq31YgT
— 𝕄𝕠𝕦𝕤𝕥𝕒𝕔𝕙𝕖 🧲 (@el_crypto_prof) June 11, 2024
Analyst Max echoed this sentiment, sharing a Bitcoin price chart overlaid with FOMC meeting dates, highlighting a recurring pattern of dips followed by bullish rebounds. “We’ve seen this before,” Max commented, suggesting a historical precedent for post-FOMC price recovery.
We've seen this before.https://twitter.com/MaxBecauseBTC/status/1800558220437856357 pic.twitter.com/Qp0w5Q0eJq
— MAX (@MaxBecauseBTC) June 11, 2024
Adding to this perspective, crypto analyst Ali Martinez noted, “Bitcoin loves to rebound after every FOMC meeting,” further reinforcing the idea of FOMC as a potential bullish turning point.
#Bitcoin loves to rebound after every FOMC meeting. pic.twitter.com/gV9iPqJ9m6
— Ali (@ali_charts) June 11, 2024
Looking Ahead: Volatility and Potential Opportunity?
While Bitcoin’s price has retreated, it remains significantly above the $60,000 psychological level. The upcoming FOMC meeting and associated economic data releases are likely to inject further volatility into the crypto market. Whether this dip represents a buying opportunity or a prelude to deeper corrections remains to be seen. Investors are advised to closely monitor market developments, conduct thorough research, and consider consulting with financial professionals before making any investment decisions.
Disclaimer: The information provided is not trading advice. Bitcoinworld.co.in holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.
Disclaimer: The information provided is not trading advice, Bitcoinworld.co.in holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.