Tuesday’s voyage for Bitcoin aficionados was a roller coaster as the top coin dropped almost 5% below $68,000. This precipitous drop eliminated the profits accumulated after a positive run whereby BTC touched $71,950 just last week. With the highly awaited Federal Open Market Committee (FOMC) meeting approaching, analysts are racing to figure out the cause of the unexpected skid and project Bitcoin’s next action.
Risk Aversion Reigns As Investors Eye FOMC, Inflation Data
The crypto market seems to be reflecting the general financial scene, in which caution rules. Bracing for the publication of crucial economic data including the Consumer Price Index (CPI) and the FOMC meeting, investors are taking a “risk-off” attitude.
One important indicator of inflation, the CPI report is supposed to clarify the situation of the US economy. Another important event that can greatly influence investor mood is the FOMC meeting when the Federal Reserve will decide on interest rates.
For risky assets like Bitcoin, the forthcoming week offers a perfect storm. Potential interest rate increases together with inflation worries are sapping investor appetite. This risk aversion most certainly translates into outflows from Bitcoin, which causes the price decline we are seeing.
A wallet that had been dormant for 5.5 years transferred 8K $BTC($535.64M) to #Binance 40 mins ago.
The wallet received 8K $BTC on Dec 6, 2018, when the $BTC price was $3,810.https://t.co/zvxAKbHKi6 pic.twitter.com/ZKZHdm4JkR
— Lookonchain (@lookonchain) June 11, 2024
Dormant Bitcoin Wakes Up, Adding Fuel To The Fire
A significant Bitcoin transfer early on Tuesday added still another level of mystery to the price movement. After more than five years of dormancy, a wallet unexpectedly sprung to life and sent a staggering 8,000 BTC, worth almost half a billion dollars, to multiple addresses, including the well-known bitcoin exchange Binance. Such a quick movement in such a big quantity of Bitcoin could have set off some temporary market instability.
Analysts Share Views On Bitcoin’s Post-FOMC Trajectory
Although the near future seems unknown, some experts still see great long-term possibilities for Bitcoin. Analysts at QCP Capital, a worldwide digital asset trading company and market maker, noted markets are “risk-off mode ahead of CPI and FOMC tomorrow.”
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3. 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 (@QCPgroup) June 11, 2024
Some social media crypto analysts also reflect this attitude. Well-known personalities like Moustache and Max highlighted historical events when FOMC meetings fell in line with declining prices followed by optimistic reversals.
Last 3 FOMC meetings marked out over $BTC‘s price action.
We’ve seen this before. pic.twitter.com/GQhTLV5pll
— Max (@MaxBecauseBTC) June 11, 2024
Featured image from Pexels, chart from TradingView
