Bitcoin saw a modest uptick in price on Thursday, offering some relief to investors amidst ongoing uncertainty over U.S. interest rates. The world’s largest cryptocurrency rose by 0.6% over the past 24 hours, reaching $66,531.0 by 08:34 ET (12:34 GMT), although it still remains below the record highs it achieved in March.
The price of Bitcoin has been largely rangebound in recent sessions, with traders exercising caution due to mixed signals regarding potential U.S. interest rate cuts. Additionally, anticipation surrounding key U.S. nonfarm payrolls data scheduled for later in the week has contributed to subdued trading activity.
Despite weakness in the dollar, which declined from recent five-month highs following comments from Federal Reserve Chair Jerome Powell, Bitcoin failed to gain significant momentum. Powell reiterated the Fed’s support for eventual interest rate cuts in 2024 but provided limited insight into the timing and scale of such cuts. He emphasized the need for the Fed to have greater confidence that inflation is moving back towards its 2% annual target.
While Bitcoin saw minor gains, other major cryptocurrencies experienced relatively muted movements. XRP, for instance, dropped to a one-month low amid anticipation of further developments in the ongoing Ripple vs. SEC case. Meanwhile, Ethereum, the world’s second-largest cryptocurrency, rose by 1.2% to $3,347.82 ahead of an upcoming SEC decision on spot exchange-traded funds for the token, expected in May.
Recent data from digital asset manager CoinShares revealed that while capital inflows into digital assets resumed after a record-high outflow, the majority of inflows remained heavily skewed towards Bitcoin. However, CoinShares analysts highlighted a slowdown in ETF activity, with daily trading turnover falling to $5.4 billion in the week ending March 30, down 36% from its peak three weeks earlier. This decline suggests waning enthusiasm for the approval of Bitcoin ETFs, which initially fueled a sharp rally over the past two months.
The approval of spot Bitcoin ETFs has been a significant catalyst for Bitcoin’s rally in 2024, culminating in record highs of over $73,000 in March.
Meanwhile, leveraged funds, including hedge funds and commodity trading advisers, set a new record for bearish bets on Bitcoin at the close of the first quarter. According to data from the Commodities Futures Trading Commission (CFTC), these funds increased their net short positions in the Chicago Mercantile Exchange’s (CME) bitcoin futures to 16,102, the highest level since the introduction of these futures in 2017.
This surge in bearish sentiment reflects a strategy wherein futures contracts are sold in anticipation or to hedge against a potential decline in Bitcoin’s price. Despite Bitcoin’s recent 10% decline from its all-time high, futures premium has remained in double digits, attracting hedge funds to capitalize on these high rates.
