Why is Bitcoin price down today?

YEREVAN (CoinChaper.com) — Bitcoin briefly fell before $60,000 before recovering in the past 24 hours, albeit raising speculations that its price declines may continue in the coming weeks — or even months. In this article, we discuss the factors behind the Bitcoin market’s depressive state.

Federal Reserve’s Hawkish Turn Hurts Bitcoin Price

On April 16, Federal Reserve Chair Jerome Powell indicated that the central bank plans to delay interest rate cuts longer than previously expected after recent data showed inflation rates remaining unexpectedly high.

The chief highlighted that the swift reduction in inflation at the end of last year had not continued and that more evidence of sustained progress toward the Fed’s 2% inflation target is needed before considering reducing borrowing costs.

Shortly afterward, the target rate probabilities for the Fed’s June meeting increased to over 81% compared to nearly 50% in March, according to CME data. In other words, traders are not betting on prolonged higher interest rates, which increases the cost of opportunity of holding yielding assets like bonds.

At the same time, this higher-for-longer rate policy reduces investors’ risk appetite, which is the primary reason behind Bitcoin’s selloff today and this week. For instance, since Powell’s comments, BTC’s price has dropped nearly 5%.

Furthermore, the Israel-Iran conflict has also negatively impacted investors’ risk appetite, boosting demand for havens like the U.S. dollar instead. Overall, this mood hurts Bitcoin even in the face of a bullish event like the Bitcoin Halving.

Bitcoin Whale Count Drops

Bitcoin’s price drop today comes against a declining number of “whales.”

Notably, the number of addresses holding at least 1,000 BTC has dropped modestly since April 15, indicating two scenarios. First, these whales are redistributing their holdings across multiple wallets. Or, they are merely booking profits at Bitcoin’s local highs, anticipating a broader downside move in 2024.

Checking the realized profits or losses data may shed more light on whether whales are redistributing or selling their Bitcoin holdings. We witnessed huge spikes across all wallet cohorts, including the 1,000-10,000 BTC one, in March, a trend that largely subsided in April.

Nonetheless, there sometimes come a few spikes where whales are seen realizing their Bitcoin profits. One also preceded the BTC price declines in the last 24 hours.

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