Bitcoin traded close to a one-month low on Monday, maintaining a downward trend established late last week as investors adopted a cautious stance ahead of the Federal Reserve's upcoming policy announcement and following extensive liquidations in leveraged crypto markets.
As of 03:05 ET (08:05 GMT), the largest digital asset by market capitalization slipped 0.2% to $80,185.6.
Within the past seven days, Bitcoin experienced a decrease exceeding 6%, reflecting a wider risk-off sentiment permeating financial markets. This shift has been driven by growing uncertainty surrounding global monetary policies, notable volatility in foreign exchange rates, and erratic movements in U.S. Treasury yields.
Market data reveal that during the recent turbulence, over $1 billion worth of leveraged cryptocurrency positions were liquidated rapidly, predominantly impacting long Bitcoin holders. Such forced closures intensify selling pressure, often exacerbating downturns as positions are automatically unwound.
Earlier in the year, Bitcoin had seen robust gains supported by expectations of relaxed monetary policy in the U.S. and steady inflows into spot exchange-traded products. However, shifting investor sentiment has led to reassessment of the interest rate outlook, prompting a pullback from risk-sensitive assets amid fluctuating currency and bond market conditions.
Currently, attention centers on the Federal Reserve's two-day meeting culminating on Wednesday. While a decision to maintain current interest rates is widely anticipated, market participants will be closely interpreting Chair Jerome Powell's commentary for insights on the timing and magnitude of possible interest rate reductions later in the year. Investors are also focused on liquidity indicators and the Fed's balance sheet dynamics, key elements influencing cryptocurrency market behavior.
Adding to uncertainty, traders await an anticipated announcement from U.S. President Donald Trump concerning his nominee for the Federal Reserve chair position. This selection could significantly shape forthcoming monetary policies, particularly if the new chair signals alignment with the administration's economic priorities or adopts a more accommodative stance.
On the altcoin front, most major cryptocurrencies also declined on Monday, continuing the recent weak trend amid a cautious investor environment.
- Ethereum, the second-largest cryptocurrency, dropped 1.5% to $2,897.92.
- XRP declined by 0.8%, reaching $1.88.
- Solana decreased 3%, while Cardano and Polygon each fell by 1.5%.
- Meme tokens showed moderate losses; Dogecoin fell 0.8%, and $TRUMP slid 1%.
The prevailing climate reflects a cautious rebalancing in cryptocurrencies influenced heavily by expectations for U.S. monetary policy developments and the legacies of forced liquidations impacting short-term price movements.