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Leading cryptocurrency Bitcoin (BTC), contrasting its previous price of $70,000, fell below $68,000, marking a significant drop. This decline in Bitcoin’s value can be attributed to several fundamental factors affecting the broader cryptocurrency market.
Two Critical Data Points for Bitcoin
Today’s decline in Bitcoin price can primarily be attributed to the S&P Global Purchasing Managers’ Index (PMI) report suggesting that the US economy is performing well. This caused an increase in the dollar, creating pressure on risky assets like cryptocurrencies. The PMI report indicated that the economy grew at the fastest pace in two years, altering investors’ expectations for interest rate cuts. This situation put additional pressure on Bitcoin and other cryptocurrencies.
At the same time, there are expectations regarding the US Securities and Exchange Commission’s (SEC) decision on spot Ethereum (ETH) exchange-traded funds (ETFs). This could be due to investors awaiting decisions that could significantly impact the market. Cryptocurrency analyst Kaleo noted that the market reaction could be severe depending on the decision, stating:
If the ETH ETF were rejected today, I wouldn’t be surprised to see prices rise as sharply as they did the other day.
Current State of Cryptocurrencies
The cryptocurrency market is also influenced by regulatory news and overall market sentiment. The SEC recently responded cautiously to the cryptocurrency bill approved by the House of Representatives. SEC Chairman Gary Gensler stated that the agency is ready for dialogue but will continue to enforce the law to ensure token operators provide legally required disclosures to help investors.
Additionally, the expectation regarding the SEC’s decision is seen in the context of the “buy the rumor, sell the news” phenomenon observed in financial markets. This behavior, where prices rise in anticipation of an event and fall after it occurs, is common in the cryptocurrency market. Simultaneously, the Ethereum market was highly volatile this week, with ETH prices increasing by more than 22% in anticipation of ETF approval. This situation was marked by short-term squeezes and intense buying, causing significant price fluctuations in the market.
