Bitcoin’s price rose on Tuesday, extending a rebound in recent sessions as steep losses from the previous week saw bargain buyers step into cryptocurrency markets. However, Bitcoin’s rebound was limited by anticipation of key U.S. inflation data later in the week. Sustained capital outflows also indicated that sentiment toward crypto remained weak. Despite the rebound, Bitcoin did experience a 3.4% increase to $56,715.3 by 01:1 ET (05:16 GMT).
The cryptocurrency markets were nursing steep losses from the past week, amid a broader decline in risk-driven markets as traders grew more concerned over an economic slowdown. This sell-off caused Bitcoin to plummet as low as $52,000, although the token managed to recover over the past two sessions. Bargain buying played a significant role in supporting Bitcoin, as recent capital flow data showed that institutional investors turned largely averse towards crypto.
Crypto markets witnessed outflows totaling about $726 million in the past week- their biggest weekly outflow since March, according to data from digital assets manager CoinShares. Traders were seen increasing short positions on Bitcoin, while altcoins were sold off across the board. A divergence was emerging between speculation over Ether and Solana, with a bias towards Solana reflecting some market hedging for more gains in the token.
Fears of slowing economic growth and expectations of a smaller interest rate cut by the Federal Reserve drove the outflows, along with a broader risk-off move in global financial markets. Market participants were awaiting the first presidential debate between Donald Trump and Kamala Harris, which was expected to take place later on Tuesday. Any signs of Trump gaining an edge in the presidential race were likely to boost crypto prices, as the Republican candidate has maintained a primarily pro-crypto stance in his campaign efforts.
Cryptocurrency Prices and Recovery
Despite market uncertainties, broader cryptocurrency prices tracked a recovery in Bitcoin. World no.2 crypto Ether rose 2.1% to $2,344.98. Other cryptocurrencies like SOL, XRP, ADA, and MATIC also saw gains between 1% and 5%. Among meme tokens, DOGE added 7.7% in value, showing some resilience in the volatile market conditions.
Focus on U.S. Consumer Price Index Data
The focus was squarely on upcoming U.S. consumer price index inflation data, scheduled to be released on Wednesday, for more cues on interest rates. This data was anticipated to provide further insights into the economic landscape and potential policy decisions by the Federal Reserve.
As Bitcoin continues to navigate through market uncertainties and fluctuating sentiments, investors and traders remain vigilant for key indicators and events that could influence the cryptocurrency’s trajectory. The market’s response to economic data and political developments further underscores the interconnectedness of traditional financial markets with the evolving landscape of digital currencies.