Bitcoin price fell on Monday, once again testing key support levels as sentiment towards cryptocurrencies showed little signs of improving ahead of U.S. inflation data that is likely to factor into interest rates.
The dollar steadied from last week’s losses, applying more pressure on crypto markets as traders remained largely biased towards the greenback ahead of the inflation readings.
Bitcoin fell 0.4% in the past 24 hours to $60,910.5 by 00:45 ET (04:45 GMT). The world’s largest cryptocurrency was close to breaking below the $60,000 support level, which could herald deeper price losses.
The token sank over 3% in the past seven days, as fears of more U.S. regulatory action against the crypto market further soured sentiment. This was exacerbated by signs of sustained capital outflows from crypto investment products, chiefly spot Bitcoin exchange-traded funds.
Bitcoin fragile, dollar strong as US inflation test approaches
The dollar steadied on Monday, pressuring Bitcoin and crypto prices as focus turned squarely towards upcoming readings on U.S. inflation.
Producer price index data is due on Tuesday, while the more closely watched consumer price index reading is due on Wednesday.
Any signs of sticky inflation are likely to further diminish expectations of early interest rate cuts by the Federal Reserve- a scenario that bodes poorly for crypto markets
Cryptocurrencies tend to thrive in a low-rate, high-liquidity environment, and the prospect of high-for-longer U.S. rates presents the opposite of such a scenario.
More comments from Fed officials are also on tap this week, after a slew of officials questioned expectations of early rate cuts.
Crypto prices took little support from comments from Presidential candidate Donald Trump, who voiced support for the industry and accused the Biden administration of trying to wipe out the industry. Trump also said that his campaign would accept crypto donations.
Crypto price today: Altcoins retreat amid few positive cues
Broader cryptocurrency prices also retreated on Monday, extending losses from last week amid little relief for markets.
World no.2 crypto Ethereum fell 1.5% to $2.884.43, while XRP and Solana fell 5.8% and 3.2%, respectively.
Memecoins also clocked losses, with Dogecoin down 5.1%.