Bitcoin Faces Pressure as Dollar Strengthens Ahead of U.S. Inflation Data

Bitcoin’s price dipped on Monday, once again testing crucial support levels as sentiment towards cryptocurrencies struggled to improve amid anticipation of U.S. inflation data that could influence interest rates.

While the dollar stabilized after last week’s losses, it added to the downward pressure on crypto markets. Traders maintained a bias towards the greenback as they awaited the inflation figures.

Bitcoin slipped by 0.4% in the past 24 hours to $60,910.5 by 00:45 ET (04:45 GMT), edging close to breaking below the $60,000 support level, signaling potential further declines.

Over the past seven days, the world’s largest cryptocurrency dropped by over 3%. Concerns about more U.S. regulatory action against the crypto market dampened sentiment, amplified by ongoing capital outflows from crypto investment products, notably spot Bitcoin exchange-traded funds.

With the focus squarely on upcoming U.S. inflation readings, the dollar’s stability on Monday exerted pressure on Bitcoin and crypto prices.

As the producer price index data is slated for release on Tuesday, followed by the more anticipated consumer price index reading on Wednesday, any indication of persistent inflation could lessen expectations of early interest rate cuts by the Federal Reserve. This scenario could spell trouble for crypto markets, which typically thrive in low-rate, high-liquidity environments.

The week also promises more commentary from Fed officials, as many have questioned expectations of early rate cuts.

Despite comments from Presidential candidate Donald Trump expressing support for the crypto industry and criticizing the Biden administration, Bitcoin and broader cryptocurrency prices failed to find substantial support.

Ethereum, the second-largest crypto, fell by 1.5% to $2,884.43, while XRP and Solana dropped by 5.8% and 3.2%, respectively. Memecoins, including Dogecoin, also experienced losses, with Dogecoin down by 5.1%.