The price of bitcoin declined on Wednesday amid weak demand for risky assets due to uncertainty over the upcoming US elections. Traders are also expecting less interest rate cuts by the Federal Reserve.
Writes UNN with a link to Investing.
The world's largest cryptocurrency lost 0.5% to trade at $67,161.7, after failing to break the $70,000 mark earlier this week.
The fall in global stock markets indicates that risk appetite remains weak, while the upcoming expiration of bitcoin options worth about $4 billion could increase volatility in the cryptocurrency market in the coming days.
The latest polls and online forecasts show that Republican candidate Donald Trump has an advantage over Democratic candidate Kamala Harris in the 2024 presidential election. However, the race remains tight, and the outcome is difficult to predict two weeks before the vote.
The previous optimism about the Trump presidency, which caused cryptocurrency prices to rise, is gradually weakening. Trump is in favor of cryptocurrencies and promises to introduce favorable regulation if elected. Harris also announced her intention to create a clear regulatory framework for cryptocurrencies.
Cryptocurrency markets continued to be pressured by a stronger dollar as rising expectations for slower interest rate cuts by the Federal Reserve pushed the US currency to nearly three-month highs. Traders are pricing in the possibility of a 25 basis point Fed rate cut in November and forecasting a higher final rate, which pushed Treasury yields to three-month highs, thereby putting pressure on risky assets.
Higher rates create unfavorable conditions for speculative assets such as cryptocurrencies, as they limit the amount of liquidity available for investment in this sector.
In the broader cryptocurrency market, altcoin prices also declined on Wednesday, following the drop in bitcoin. The second largest cryptocurrency by capitalization, Ether, lost 1.4%, dropping to $2,610.01. Ether's volatility is expected to increase this week due to the expiration of options worth about $1 billion.
There was also a decline in prices for XRP, SOL, MATIC, and ADA from 0.4% to 3%. The DOGE memo token lost 4.7% of its value.
Recall
On Monday, bitcoin reached a three-month high due to increased speculation about Donald Trump's possible victory in the 2024 elections.