Bitcoin price fell on Monday, extending a deep decline from the past week as concerns over U.S. interest rates and anticipation of key inflation data kept traders largely biased towards the dollar. The world’s largest cryptocurrency was nursing steep losses over the past week as traders grew skeptical over the timing of interest rate cuts by the Federal Reserve. This sentiment is likely to see little signs of improvement this week, especially ahead of key PCE price index data due this Friday.
The reading of the PCE price index is the preferred inflation gauge of the Fed and is likely to factor into the central bank’s outlook on interest rates in the coming months. While Friday’s data is expected to show some mild cooling in inflation, the reading is still expected to remain well above the Fed’s 2% annual target, giving the central bank more headroom to keep rates high. High rates bode poorly for crypto, diminishing the appeal of speculative, risk-driven assets such as Bitcoin and other cryptocurrencies.
Major altcoins saw much deeper losses than Bitcoin, with Ether falling 4.2% to $3,366.81, hitting a one-month low. XRP sank 3.3%, while ADA and SOL slid 4.3% and 7.4%, respectively. Both tokens had seen some gains in recent sessions. Among meme tokens, DOGE and SHIB fell 4.7% and 5.8%, respectively. The broader cryptocurrency market was also pressured by a strong dollar, as the greenback came close to a two-month high following robust U.S. purchasing managers index data.
Recent capital flow data showed institutional demand, especially for crypto investment products, remained centered largely around Bitcoin. However, even Bitcoin was seen logging heavy outflows earlier in June. Altcoins faced challenges from a slew of token unlocks, dwindling institutional demand, and profit-taking that pressured crypto prices overall.
The cryptocurrency market is facing challenges due to concerns over U.S. interest rates and anticipation of key inflation data. As Bitcoin and altcoins experience deeper losses, investors are closely watching for any signs of improvement in the market conditions. With institutional demand centered largely around Bitcoin, the performance of the world’s largest cryptocurrency remains crucial for the overall market sentiment.