Bitcoin Nosedives as Investors Dump Crypto Ahead of Fed Decision

Bitcoin has experienced a third-day decline, posting its worst monthly performance since late 2022. The value of the cryptocurrency has fallen nearly 16% in April amid investor withdrawals ahead of the Federal Reserve's interest rate decision. Despite the downward trend, Bitcoin remains up 35% year-to-date and double its value from the previous year. The recent slump has been attributed to profit-taking and a shift in investor sentiment following expectations that the Fed may not cut interest rates this year.

Bitcoin Plunges Further: Investors Shed Crypto Holdings Ahead of Federal Reserve Decision

London, April 26: Bitcoin's downward trajectory continued for a third consecutive day on Wednesday, extending its worst monthly performance since late 2022. Amidst heightened investor anxiety, the flagship cryptocurrency witnessed a decline of nearly 4.7%, plummeting to its lowest level since late February at $57,055.

Investors have been actively withdrawing funds from cryptocurrencies in anticipation of an imminent interest rate decision by the Federal Reserve. The value of Bitcoin has nosedived by approximately 16% in April alone, as investors sought to secure profits following a robust rally that had driven the price to record highs exceeding $70,000.

Ethereum, the second-largest cryptocurrency by market capitalization, also experienced losses, though they were less significant. Ether declined by 3.6% to $2,857, marking its weakest position since February.

Bitcoin's current price represents a significant 22% decline from its all-time high of $73,803 set in March, technically classifying it as within a bear market. Despite this setback, Bitcoin remains 35% higher than it was at the beginning of the year, and it has doubled in value over the past 12 months.

According to Fineqia research analyst Matteo Greco, the recent downtrend can be attributed to profit-taking by investors who entered the market during the downturns of 2022 and 2023, as well as ETF investors who have experienced substantial price appreciation on their shares since entering the market earlier this year.

The Federal Reserve's monetary policy stance is also influencing investor sentiment. While no interest rate changes are anticipated at this meeting, there is a growing belief among investors that the central bank may not lower rates at all this year. This outlook has weighed heavily on interest rate-sensitive assets, including cryptocurrencies, emerging market stocks and bonds, and even commodities. Investors have responded accordingly, resulting in the largest weekly outflow from 10 major US spot bitcoin ETFs since their inception in January.

According to data from LSEG, outflows this week have reached $496 million, primarily due to a slowdown in inflows into BlackRock's iShares Bitcoin Trust, the largest ETF in terms of holdings.

Bitcoin's so-called "halving event," which occurred on April 20, has failed to provide meaningful support to its price. Since the event, which involves a change to the cryptocurrency's underlying technology designed to reduce the rate at which new bitcoins are created, Bitcoin has shed approximately 15%. Many investors had anticipated that the halving event would underpin the price, but those expectations have not materialized.