By Amanda Cooper
LONDON (Reuters) -Bitcoin fell for a third day on Wednesday after posting its worst monthly performance since late 2022 in April, as investors pulled money from cryptocurrencies ahead of a later Federal Reserve interest rate decision.
The value of the world’s most traded cryptocurrency fell nearly 16% in April as investors booked profits during a blistering rally that has sent its price to record highs above $70,000.
Bitcoin was last down 4.7% at $57,055, the lowest since late February, while losses in ether were more modest, down 3.6% to $2,857, also the weakest since February.
Bitcoin’s price is now as much as 22% below its March record high of $73,803, technically marking a bear market. But so far this year, yields are still up 35% and double what they were at this time last year, thanks in large part to the billions of dollars that have flowed into new exchange-traded funds since January.
“The recent downward trend can be attributed to increased profit-taking by investors who entered the market during the 2022 and 2023 recessions, as well as ETF investors who witnessed significant share price appreciation after entering the market in the early weeks of 2024.’, says Fineqia research analyst Matteo Greco.
On the macro front, the Fed is not expected to make any interest rate changes later, but the view is taking root among investors that the central bank may not cut rates at all this year, which will be a blow to interest rate-sensitive assets such as cryptocurrencies , shares and bonds from emerging markets or even commodities.
Investors have responded accordingly. The 10 largest U.S. spot bitcoin ETFs are facing their largest weekly outflows since their inception in January.
Outflows top out at $496 million this week, mainly as inflows into BlackRock’s iShares Bitcoin Trust, the largest in terms of holdings, have declined, according to LSEG data.
Bitcoin’s so-called “halving event” last month did little to prop up the price. Since April 20, when the halving took place, bitcoin has fallen by about 15%. Many investors bought into the market in the run-up to the event, which marks a change in the cryptocurrency’s underlying technology and is designed to slow the rate at which new bitcoins are created.
(Reporting by Amanda Cooper, additional reporting by Samuel Indyk; Editing by Stefano Rebaudo and Ros Russell)
