Bitcoin (BTC-USD) saw a decline on Thursday, reversing its recent gains. This fluctuation occurs as investors are keenly watching for upcoming US economic data releases, which are expected to influence the Federal Reserve’s decisions regarding interest rate policy.
The leading cryptocurrency, based on market capitalization (BTC-USD), experienced a 0.7% decrease at the time of this report. Its value is now approximately $111,786 (£82,015), having fallen below the $112,000 mark during early trading hours in Asia. The cryptocurrency had briefly rallied on Wednesday, approaching $114,000, but this upward trend proved short-lived.
Read more: Crypto live prices
The price drop follows a period of significant forced liquidations earlier in the week. These liquidations affected traders who had leveraged their positions heavily in anticipation of Bitcoin’s (BTC-USD) price increase. The resulting losses across various cryptocurrency exchanges totaled approximately $1.5 billion.
Limited market liquidity combined with substantial speculative investments intensified the selling pressure. Consequently, Bitcoin (BTC-USD) plummeted from above $115,000 to the lower $112,000 range within a 24-hour period at the start of the week.
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Risk aversion has taken hold in the markets since Federal Reserve Chairman Jerome Powell indicated the absence of a guaranteed approach to monetary policy. Powell highlighted the potential risks associated with both prematurely easing and excessively delaying policy adjustments. Other Federal Reserve officials have reinforced the need for a strategy guided by incoming economic data, dampening investor enthusiasm for riskier assets.
Based on current market expectations reflected in the CME FedWatch tool, traders anticipate that the Federal Reserve will reduce interest rates from the existing range of 4.5%–4.75% to approximately 3.5% to 4.0% by the close of 2025.
Market participants are now awaiting new US economic data releases for further clarity. These include weekly unemployment claims and the final Q2 GDP estimate on Thursday, followed by Friday’s release of the PCE price index, the Federal Reserve’s preferred inflation indicator.
The downturn has spread across the broader cryptocurrency market over the past day. Ethereum (ETH-USD) declined by 4% to $4,013.33, reaching its lowest point in seven weeks, while Solana decreased by 3.2%, Cardano by 2.7%, and Polygon by 2.5%. Meme coins also weakened, with Dogecoin (DOGE-GBP) falling by 2% and Official Trump declining by 1.5%. XRP (XRP-USD) remained relatively stable at $2.85.
Timothy Misir, head of research at BRN, noted that the Federal Reserve’s cautious approach is influenced by the persistence of inflation risks and the resilience of consumer demand in certain sectors. He also pointed out China’s increasing its sovereign gold reserves as part of a move away from dollar dependence, which could affect crypto as a global asset.
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Furthermore, ETF flows remain a key factor. Bitcoin ETFs experienced net inflows of $241 million on Wednesday, offsetting previous outflows, while Ethereum ETFs continued to see outflows, with $79 million in redemptions.
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