Bitcoin price took a drag on Monday, continuing its bleeding streak as investor sentiments were largely damaged by a hawkish Fed. At the press time, the OG cryptocurrency is trading at $65,881.15, down 1% as compared to the same time last day.
The fall in prices also comes at a time when outflows from digital assets in the previous week accumulated to $600 million. The outflows have created huge trading pressure on Bitcoin, which might struggle a little this week to pick pace.
Bitcoin Outflows Dampen Market Trading
According to a report by CoinShares, last week saw the highest outflow from digital asset investment products since March 22, 2024, totaling US$600 million. This was probably caused by investors reducing their exposure to fixed-supply assets following a FOMC meeting that was more hawkish than anticipated.
Additionally, the pessimism attracted US$1.8 million in short-bitcoin inflows. With US$621 million in outflows directed solely toward Bitcoin, the bear market also attracted US$1.8 million in inflows into short positions in the cryptocurrency. Also, with inflows of US$13 million, US$2 million, and US$1 million, respectively, Ethereum, LIDO, and XRP led the way among a wide range of altcoins.
The outflows have also delayed the next leg of the bull market, which was also influenced by a sharp decline in cryptocurrency prices brought on by growing macroeconomic worries.
The Federal Reserve's Interest Rate was left unchanged at last Wednesday's FOMC meeting, which was to market expectations. However, Fed Chair Jerome Powell surprised everyone by sounding aggressive at his press conference.
Furthermore, according to the Fed's Summary of Economic Projections, also known as the dot plot, there has only been one rate drop this year. In addition, the Fed raised its 2024 inflation estimate from 2.4% to 2.6%, while its mean core PCE estimate jumped slightly from 2.6% to 2.8%.
Will BTC Rise This Week?
Investors have historically heavily weighed the Federal Reserve's rate decisions and inflation estimates when assessing assets. Government securities generally lose value during reduced interest rates, making virtual assets like Bitcoin more appealing.
The market is currently witnessing a sharp decline in activity, posing a challenge for Bitcoin to surpass the $68K resistance level. The losses incurred earlier in the week have been further amplified by the recent sideways movement in the cryptocurrency market, reflecting the current volatility and uncertainty.
However, historically, the $65 K mark has provided some support to Bitcoin prices. If the market sees better cues and optimism this week, BTC is likely to start trading in the green again.
