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Bitcoin price today: BTC drops below $64k on dollar strength, GBTC outflows

Published 03/21/2024, 01:42 AM
Updated 03/22/2024, 05:07 PM
© Reuters

Investing.com-- Bitcoin price weakened in Asian trade on Friday as strength in the dollar, which rebounded sharply to three-week highs, and the continuing large outflows from the Grayscale Bitcoin Trust (GBTC), pushed the world’s largest cryptocurrency below $64,000.

Bitcoin traded down 3.13% at $63,443.6 by 17:01 ET (21:01 GMT). The token saw a heavy dose of consolidation from record highs over the past seven days but still remained steady above weekly lows.

Strength in the dollar was the biggest source of pressure on crypto markets, as an unexpected interest rate cut from the Swiss National Bank and dovish signals from the Bank of England saw traders stick firmly to the greenback as among the few high-yielding, low-risk currencies. The dollar index surged to a three-week high of over 104 points.

In addition, US-listed spot Bitcoin ETFs, which have been the primary driver of the latest BTC rally, saw their fourth straight day of net negative flows. Interestingly, nearly all of the funds are seeing positive flows but it was not enough to offset the substantial outflows from GBTC, which experienced a $359 million withdrawal on Thursday, contributing to a total $94 million outflow across all funds in the group.

Bitcoin price heads for weekly loss amid dollar strength, profit-taking

The world’s largest cryptocurrency was now trading down about 5% from last Friday’s levels amid pressure from the dollar and sustained profit-taking.

The token had surged to record highs above $73,000 last week, as it benefited from strong capital flows into the recently-approved spot exchange-traded funds in U.S. markets. These funds were a key point of support for Bitcoin so far in 2024, with the token trading up around 50% for the year.

Bitcoin also remained well above lows hit during the week, when anticipation of a Federal Reserve meeting drove the token as low as $60,000.

But the near-term outlook for the token was clouded by a strong dollar, as signs of resilience in the U.S. economy, in comparison to its peers in the developed world, made the greenback appear especially attractive. The Fed may also lag most of its central bank peers in cutting interest rates.

Still, with the Fed maintaining its outlook for at least three interest rate cuts in 2024, the dollar is expected to eventually decline. Markets are still positioned for a 25 basis point cut in June, according to the CME Fedwatch tool.

Such a scenario bodes well for Bitcoin, given that the token’s highly speculative nature helps it thrive in a low-rate environment.

A halving event, which is expected to slash the generation of new Bitcoin by 50%, is also expected to push up prices in 2024. The halving is expected to occur by April.

"ETF activity may begin to slightly fade away and make room for the highly-anticipated halving. With the way ETF activity impacts Bitcoin now, it is this rewards-halving event that will determine Bitcoin’s next course of price action," Elitsa Taskova, Chief Product Officer at Nexo, told Investing.com.

Mike Novogratz on why Bitcoin is likely to remain on an uptrend

During the Bitcoin Investor Day in New York on Friday, Mike Novogratz, the CEO of Galaxy Digital, forecasted a bullish future for Bitcoin due to concerns over US fiscal practices.

Highlighting the national debt exceeding $34 trillion and government expenditure reaching 25% of GDP, he argued that Bitcoin serves as a reliable safeguard against the risks of inflation and the devaluation of currency, amidst growing government borrowing and spending.

"What's the macro story for bitcoin?" said Novogratz. "It's relatively simple. Our government can't keep its pants on and stop spending money. That went from a problem in the early 2000s to a crisis with Donald Trump and Joe Biden. They go down as the two presidents who destroyed our fiscal stability."

Novogratz's stance resonates with investors using Bitcoin to hedge against fiscal unpredictability.

He traced the rise in government spending through the Trump and Biden eras, highlighting the entrenched nature of structural deficits.

"Until you see a government, both Dems and Republicans, that says 'enough,' bitcoin's going to keep going higher," Novogratz said.

[Ambar Warrick contributed to this article]

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