Bitcoin’s value dropped to its lowest in a week because investors decided to sell after it reached record highs and because of unexpected inflation in the U.S.
During trading in Asia, Bitcoin fell by more than 5%, reaching $66,629.96, before it started to go back up and ended up being 3.5% lower.
Bitcoin had reached a new high of $73,803.25, making it the fourth day in a row it hit a record. But experts say that after Bitcoin hits a record, it usually becomes more unstable, especially when the Federal Reserve isn’t as supportive as people thought it would be.
Matt Simpson, who watches the market for City Index, said Bitcoin tends to get more unstable after it hits a record. He’s worried because the Federal Reserve isn’t being as helpful as they expected.
New data about the U.S. economy made people in the market worried. It showed that sales at stores didn’t go up as much as expected in February and prices for things companies buy were higher than people thought they would be. This news came after other data showed that prices were going up.
People in the market changed their minds when they saw what might happen in the future. They think there’s less chance the Federal Reserve will lower interest rates in June. A week ago, there was about a 74% chance, but now it’s about 60%, according to a tool that watches what the Fed might do.
ETH and BTC (Via Iris Moody/Getty Images)
When interest rates are higher for a long time, especially in the U.S., it usually means bad news for things like cryptocurrencies.
Even with this drop, Bitcoin has gone up by almost 60% this year because more people in the U.S. are buying it and because people around the world are guessing about what will happen with interest rates.
MicroStrategy, a software company, showed it believes in Bitcoin’s future by saying it will raise more money to buy Bitcoin.
This is the second time they’re doing this, after saying the same thing on March 5. It shows they want to have more Bitcoin because they think it will become even more valuable.
Joshua Chu, who watches the risk for Invess, said the crypto market doesn’t have many rules, so when big traders make big moves, it can make prices go up and down quickly.
Ether, the second-biggest cryptocurrency, also went down, reaching its lowest in a week and falling by more than 4% to $3,670.
