A deteriorating macroeconomic environment and the collapse of industry giants such as FTX and Terra have had a negative impact on Bitcoin’s price this year.
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Bitcoins The price fell to around $57,000 each on Thursday, a two-month low after the U.S. Federal Reserve released minutes from its June meeting, showing the central bank is not yet ready to cut rates.
At around 2:30 p.m. London time, the digital currency was down around 5% in 24 hours to $56,837, falling below $57,000 for the first time since May 1, according to data from crypto ranking site CoinGecko. Bitcoin has since pared its losses somewhat and was trading at $57,932.57 as of 5:05 p.m. London time, down 3.4%.
Rival token ether, the world’s second-largest cryptocurrency, fell 5% to $3,120.
This comes after the Federal Reserve released minutes of its June meeting on Wednesday, which showed authorities are reluctant to cut rates until additional data shows inflation is moving sustainably toward the central bank’s 2% target.
Higher interest rates are generally less favorable for Bitcoin and other cryptocurrencies, as they reduce investors’ risk appetite.
Bitcoin reached a record high of over $73,700 in March this year after the Securities and Exchange Commission approved the first US spot bitcoin exchange-traded fund (ETF).
ETFs allow investors to buy a product that tracks the price of bitcoin without owning the underlying cryptocurrency. Crypto advocates say this has helped legitimize the asset class and made it easier for larger institutional investors to get involved.
Since then, Bitcoin has been trading at a price between $59,000 and $72,000.
Recently, the world’s largest cryptocurrency has been under pressure following news of the collapsed bitcoin exchange Mt. Gox, which was preparing to distribute around $9 billion worth of coins to users, which is expected to lead to some significant selling.
However, analysts at crypto data and research firm CCData reported in a research report on Tuesday that Bitcoin has not yet reached the peak of its current appreciation and is likely to hit a new all-time high.
According to the report, historical market cycles have shown that bitcoin’s so-called “halving” — which reduces the supply of new bitcoins into the market — always precedes a period of price appreciation that can last 12 to 18 months “before a cycle top occurs.”
The last Bitcoin halving took place on April 19th of this year, so that historic period has yet to end.
“Furthermore, we have observed a decline in trading activity on centralized exchanges for almost two months following the halving in previous cycles, which seems to mirror this cycle. This suggests that the current cycle could extend further into 2025,” CCData said.
Meanwhile, Bitcoin bull Tom Lee told CNBC’s “Squawk Box” on Monday that he still expects bitcoin to hit $150,000 despite the “overhang” from Mt. Gox’s upcoming token distribution to creditors.
“If I was invested in crypto and knew that one of the biggest overhangs was going to go away in July, I would think that would be a reason to expect a decent rebound in the second half of the year,” Lee, co-founder and head of research at Fundstrat Global Advisors, said in the TV interview.