Bitcoin Declines On Interest Rate, Regulatory Concerns

Bitcoin price declined on Wednesday, reversing a rebound seen over the weekend due to persistent concerns over more regulatory scrutiny against the cryptocurrency industry. The dollar rebounded from recent losses after Federal Reserve officials signaled that the central bank was more likely to keep rates unchanged in 2024. Bitcoin fell 1.8% in the past 24 hours to $62,336.7 by 08:21 ET (12:21 GMT). At the time of writing, Bitcoin is declining further to $61260, according to Binance, down -2.63.

The world’s largest cryptocurrency remained comfortably within a trading range seen for most of the past two months, as momentum in the token waned after it hit a record high in March.

Capital flows data released earlier this week showed that crypto investment products, particularly Bitcoin, saw a third straight week of steep outflows as hype over exchange-traded funds launched earlier this year ran dry. A report released earlier this week showed that over 90% of transactions in stablecoins were inorganic and not from real users, raising questions over the retail demand for crypto. The report also raised concerns over more regulatory action against stablecoin operators, specifically Tether, which is the largest of the lot.

When it comes to actual regulatory action, trading app Robinhood Markets Inc. (NASDAQ:HOOD) announced that the Securities and Exchange Commission may take action against it because of the type of cryptocurrency tokens that are traded on its platforms. In court disputes with cryptocurrency exchange Coinbase and XRP issuer Ripple, the SEC has maintained for a long time that cryptocurrency tokens are securities.

Wider cryptocurrency prices declined as a result of the dollar’s rebound and the Federal Reserve’s announcement that interest rates would probably stay steady this year. Solana and XRP dropped 6.1% and 2.7%, respectively, while Ethereum dropped 2.5% to $2,996.41. Given that the cryptocurrency market often benefits from a low-rate, high-liquidity environment, high longer-term U.S. rates are not good news.