Broader crypto prices also retreated after logging strong gains since Friday, following comments from Federal Reserve Chair Jerome Powell that the bank was gearing up to cut interest rates. Weakness in the dollar, which sank to a 13-month low, also aided crypto prices.
Bitcoin fell 0.5% to $63,737.0 by 09:08 ET (13:08 GMT).
But further gains in the token were somewhat stymied by persistent strength in the Japanese yen. A sharp appreciation in the yen earlier this month had rattled risk-driven markets and also unwound a carry trade favoring speculative assets such as crypto.
The world’s largest cryptocurrency rose sharply in the past two days following Powell’s comments, which suggested that an interest rate cut was imminent.
Markets are now positioning for a September interest rate cut, but are split over a 25 or 50 basis point reduction, according to CME Fedwatch.
PCE price index data- which is the Fed’s preferred inflation gauge- is due this Friday, and is likely to determine the path of any rate cuts.
Lower rates bode well for speculative assets such as crypto, given that they free up more liquidity for investing in the sector.
Independent presidential candidate Robert. F. Kennedy Jr, who has maintained a pro-crypto platform, suspended his campaign and threw his weight behind Republican nominee Donald Trump, who has also maintained a pro-crypto stance.
The move sparked gains in crypto markets amid increased speculation that Trump could clinch a victory against Democratic nominee Kamala Harris- a scenario that presents friendlier regulations for crypto.
Trump has maintained a largely pro-crypto stance in his campaigning, and had recently appeared as a keynote speaker at the Bitcoin conference.
Among broader crypto markets, most altcoins retreated as a weekend rally cooled and as markets sought more cues on U.S. interest rate cuts.
World no.2 token Ether slipped nearly 1% to $2,732.90, while SOL, XRP and ADA moved in a flat-to-low range.
MATIC lost 3.8%, while among meme tokens, DOGE fell 1.7%.
Crypto demand has notably “dried up in recent weeks,” Citi analysts said in a Friday note.
Spot BTC and ETH ETFs have experienced net outflows over the past month, which has coincided with lower search interest and subdued network activity.
Moreover, weaker crypto demand is evident in futures funding rates, which briefly dipped into negative territory during August.
The analysts suggest that ETF flows may continue to struggle until there is greater clarity on the soft-landing versus hard-landing outcome for the US economy. However, they add that “should soft-landing conviction rise, we would likely start to see flows pick up.”
As of August 22, spot Bitcoin ETFs have recorded net inflows of $17.3 billion, accounting for nearly 40% of the variation in weekly Bitcoin price movements since their launch in January. In contrast, ETH ETFs, which were introduced in July, have experienced net outflows of $460 million, Citi notes.
Ambar Warrick contributed to this report.
Source: Cryptocurrency - investing.com
