The world’s leading cryptocurrency, Bitcoin, faced a 3% drop on Tuesday, trading at $29,171. The failure to sustain higher price levels may have led short-term bulls to secure their profits, affecting the sentiment and leading to short positions.
Amidst market volatility, two important factors that weigh on BTC‘s performance are the ongoing Binance lawsuit and concerns over a potential interest rate hike. As these uncertainties arise, investors may closely monitor market dynamics to make informed decisions. The price drop in BTC coincided with a Wall Street Journal report that raised concerns about Binance among investors. The report highlighted statements made by Binance CEO Changpeng “CZ” Zhao in 2019, during the launch of Binance’s US trading arm, which raised questions about potential “wash trading” activities and sparked suspicions of inflated trading volume.
Binance, the largest cryptocurrency exchange by volume, is facing legal challenges after being sued by the Securities and Exchange Commission (SEC) last month. It is currently under investigation by the Department of Justice, which could result in a consent decree or settlement.
The investigation focuses on preventing money laundering and avoiding sanctions violations, which could have potential consequences for Binance’s future operations. Additionally, investors are closely following the outcome of the Federal Reserve’s two-day meeting for clues on potential interest rate hikes.
Historical rate hikes have contributed to Bitcoin’s price decline, and market participants are cautious about the Federal Reserve’s future decisions given ongoing concerns about economic stagnation. As the Federal Reserve meeting concludes, it is expected that Bitcoin’s price will continue to experience volatility within a narrow range.
The market has already priced in expectations of a 25 basis point interest rate hike by the Fed this week and is closely monitoring signals for future interest rate actions. Until there is more data and confidence in inflation trends, the FOMC’s rate decisions may remain uncertain and potentially impact Bitcoin’s ability to break out from the $31,500 level in the short term. Investors may closely analyze the Fed’s statements for any potential impact on the cryptocurrency market.