Bitcoin's latest price on Wednesday fell 6.3% to $57,505.24.
Competing cryptocurrencies Ether, Solana, and XRP fell 4.5%, 5.9%, and 1.4%, respectively.
Cryptocurrency market participants are paying close attention to future interest rate decisions by the US Federal Reserve. The Federal Open Market Committee is scheduled to meet Wednesday afternoon to discuss updated interest rate policy.
Market volatility has increased recently as investors worry that the path to a rate cut could be lengthy. Investors are looking to Fed Chairman Jerome Powell for hints about what needs to happen before interest rates are cut.
Bitcoin is known to trade much like traditional risk assets such as stocks. Proponents describe it as a hedge against rising inflation, but the token's track record here has been mixed.
Jeff Kendrick, head of digital asset research at Standard Chartered, said in a note Wednesday that Bitcoin's drop below $60,000 “reopens the path to the $50,000-$52,000 range. ” he said.
“This driver appears to be a combination of cryptocurrency-specific macros and broader macros,” Kendrick said.
He pointed out that the main factors impacting the token were five consecutive days of outflows from US spot Bitcoin exchange-traded funds, as well as a deteriorating macro environment and deteriorating market liquidity.
Kendrick added that the reaction to the launch of the Bitcoin Spot ETF in Hong Kong earlier this week was “poor”, adding that despite the ETF's strong net asset position, the ETF's volume on its first day was The focus was on the fact that the amount was small, in the millions of dollars. .
“Liquidity is important when it matters, of course, but given the strong U.S. inflation numbers and the low likelihood of a Fed rate cut, liquidity is important right now,” Kendrick said in a note. .
The drop in prices in the cryptocurrency market also came a day after former Binance CEO Qiao Changpeng was sentenced to four months in prison on money laundering charges.
