Bitcoin (BTC) Dips Under $57,000 as US Macroeconomic Uncertainty Cools Inflation May Bolster Risk Appetite

Bitcoin’s (BTC) dip under $57,000 followed minutes from the U.S. Federal Reserve meeting, which confirmed a continuation of current interest rates till economic data justifies looser policies.

Bitcoin (BTC) dropped to a two-month low on Thursday as macroeconomic uncertainty in the U.S. kept traders on edge, but cooling inflation data could pave the way for monetary policy easing that might bolster the risk appetite.

BTC fell below $57,000 after minutes from the U.S. Federal Reserve meeting showed a consensus to continue with the current interest rates until economic data justifies looser policies.

“The Fed’s decision to maintain a wait-and-see approach before committing to interest rate cuts signals a cautious optimism that inflation is on a downward trajectory but not sufficiently assured to justify immediate rate reductions,” Bitfinex head of derivatives Jag Kooner said in a report.

The premier cryptocurrency displayed the macro correlation highlighted by Token Bay Capital founder Lucy Gazmararian last month, shedding over 5% in 24 hours. Higher interest rates, such as the levels maintained by the U.S. central bank, tend to work against demand for risky assets like cryptocurrencies, which could have influenced Thursday’s market activity.

BTC has traded in a range between $56,800 and $70,000 after a stellar start to the year amid anticipation for spot BTC ETF approval and pre-halving hype. Those momentum drivers have now cooled.

However, upcoming data could shape a clearer outlook for the coming months, according to Kooner.

Non-Farm Payrolls (NFP) report due Friday could boost expectations for future rate cuts or spell further downside for Bitcoin

The Non-Farm Payrolls (NFP) report, due out on Friday, could either boost expectations for future rate cuts or spell further downside for Bitcoin, according to Kooner.

If market participants anticipate that the ongoing economic uncertainty will eventually prod the Fed to cut rates, Kooner said Bitcoin’s appeal as an inflation hedge could resurface, directing capital into spot BTC ETFs.

However, “we’ve recently seen quite underwhelming flows and a lack of “dip-buying” since the Bitcoin halving,” Kooner noted in his remarks. Bloomberg's James Seyffart noted that U.S. spot BTC ETF activity has stalled, especially when it comes to trading volume.

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