Bitcoin fell on Wednesday for the third day in a row as the cryptocurrency pulled back from its latest run in this year’s rally, and investors looked ahead to the conclusion of the latest Federal Reserve meeting.
The price of the flagship cryptocurrency was last higher by 1% at $65,381.29, according to Coin Metrics. It fell as low as $60,793.60 in overnight trading.
Cryptocurrencies reversed higher in late afternoon trading after the conclusion of the Federal Reserve’s two-day policy meeting, where the central bank held rates steady, as expected, and said it still sees multiple rate cuts this year.
Bitcoin turns higher after Fed meeting
Bitcoin has declined 12% in the past week, after hitting an all-time high of $73,797.68 last Thursday. It’s still up almost 50% for the year.
“The ETF-induced rally has – at least temporarily – come to a halt as net inflows start to slow,” Citi analyst Alex Saunders said in a note Wednesday. “Total inflows have netted $12 billion since inception, but the slowing pace has likely contributed to the weaker price action after bitcoin recently made new all-time highs.”
“Higher frequency crypto volatility has eased as financing rates on futures have started to normalize, signifying less demand for leveraged crypto exposure,” he added. “Still, open interest and volumes remain elevated.”
Other cryptocurrencies trimmed earlier losses too. Ether was last higher by less than 1% at $3,369.26, after breaching $4,000 last week. XRP fell 1%, Solana rose less than 1% and dogecoin gained 4.5%.
Crypto-linked stocks fared better, however. Coinbase rose 10%. MicroStrategy rose 7%, after tumbling about 20% earlier this week. In the mining sector, Iris Energy and CleanSpark gained 26% and 19%, respectively. Marathon Digital advanced 14% and Riot Platforms, which JPMorgan upgraded Wednesday to overweight from neutral, added 11%.
Recent weakness in bitcoin began as traders started taking profits after it had soared roughly 70% from the start of the year to its peak last Wednesday. Data from CryptoQuant shows a massive spike in short-term holders selling their bitcoin at a profit on March 12. That profit-taking led to a spike in long liquidations of leveraged bitcoin positions that continued through the start of this week, according to CoinGlass.
“We’ve seen 20%-30% pullbacks in previous bitcoin bull markets as a normal occurrence when things start heating up. And we definitely had many signs over the past week of things heating up quite a bit,” Vijay Ayyar, vice president of international markets and growth at crypto exchange CoinDCX, told CNBC.
If bitcoin were to fall below the $60,000 threshold, the cryptocurrency could weaken further to test the $50,000 to $52,000 level, Ayyar added, “which would be our line in the sand for this bull market to sustain going forward.”
Further, some momentum has come out of the bitcoin ETFs, which recorded a total of $154.4 million of net outflows on Monday, according to BitMEX Research. It was the first time the ETFs recorded net outflows since March 1.
—CNBC’s Ryan Browne contributed to this report.
