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Bitcoin’s downward trajectory continued on Tuesday, as the cryptocurrency grappled with a confluence of negative factors, including regulatory concerns, particularly surrounding U.S. actions and German government sales, coupled with broader risk aversion in the market.
The world’s largest cryptocurrency slid 2.4% in the past 24 hours, reaching $61,332.0 by 01:22 ET (05:22 GMT), after hitting a low of $59,215 in overnight trading. The sell-off was fueled by a combination of regulatory headwinds and mounting inflation concerns.
Reports of the German government selling Bitcoin confiscated from a piracy website, along with news of the U.S. Commodity Futures Trading Commission investigating market maker Jump Trading over its crypto activities, added to the prevailing risk-off sentiment in the crypto market. Traders sought refuge in the dollar ahead of the release of key U.S. inflation data this Friday.
The PCE price index, the Federal Reserve’s preferred inflation gauge, is expected to provide further insights into the direction of interest rates. Rising fears of high rates have weighed heavily on crypto markets in recent weeks, and the strength of the dollar has further diminished the appeal of digital assets.
Data from CoinShares revealed that crypto investment products experienced outflows totaling around $584 million for the second consecutive week, with a significant portion stemming from U.S. Bitcoin exchange-traded funds. While Bitcoin products saw outflows of $630 million, altcoin products enjoyed mild inflows as investors sought buying opportunities amid the recent price slump.
Despite the overall bearish sentiment, broader crypto prices managed to rise on Tuesday, with major altcoins rebounding from steep losses. Ether, the second-largest cryptocurrency, edged up 0.2% to $3,377.80, after giving up most of its gains fueled by hype surrounding a potential spot Ether ETF. Other altcoins like ADA, SOL, and XRP also saw gains, with Solana leading the pack, albeit with thin trading volumes.
Meme tokens like SHIB and DOGE also added about 2% each, providing a brief respite from the broader crypto market’s recent struggles.
Overall, the crypto market remains under pressure from regulatory concerns and inflation fears. The upcoming U.S. inflation data and further regulatory developments will likely play a crucial role in shaping the future trajectory of Bitcoin and other cryptocurrencies.
