On Wednesday, the price of bitcoin dropped below $60,000 as early enthusiasm over the Fed’s rate cuts started to wane. The biggest cryptocurrency in the world has seen a sharp decrease over the last day.
With this, Bitcoin has fallen 12% in the last three months and is now 20% below its peak of almost $74,000, which was reached in March.
Although the reason for the massive losses was not immediately apparent, traders may have taken profits following last Friday’s brief rally that followed Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Economic Symposium.
Powell made a suggestion during his speech that a rate cut by the central bank in September is all but guaranteed. Since cryptocurrencies are believed to yield higher returns than safer investments like government bonds, historically lower interest rates have benefited them. Following Powell’s remarks, the price of bitcoin first increased, but it has since lost all of those gains.
FxPro analyst Alex Kuptsikevich says that a lack of trading volume, which is typical in late August when markets tend to slow down, is another reason for the recent decline in the price of Bitcoin. Kuptsikevich stated in a morning research note, “The market seems to have been largely dragged down by auto-stop orders during light trading hours.”
“Such sales often push out leveraged investors but can also attract long-term buyers looking to buy at lower prices.”
*This is not investment advice.