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Bitcoin trades around $57,000, crypto market drops 6% ahead of Fed decision
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Bitcoin fell in line with the broader cryptocurrency market, with ether and other altcoins also falling.
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Financial markets were weighed down by risk-off sentiment ahead of the Fed’s interest rate decision and press conference later in the day.
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10x Research said it is targeting a price target of $52,000 to $55,000, anticipating further selling pressure.
Bitcoin {{BTC}} was trading around $57,700 during European morning trading on Wednesday after falling to its lowest level since late February, as the world’s largest cryptocurrency recorded its worst month since November 2022.
BTC has fallen about 6.3% over the past 24 hours, after breaking below the $60,000 support level late Tuesday, according to data from CoinDesk. The broader crypto market, as measured by the CoinDesk 20 Index (CD20), lost nearly 9% before recovering part of its decline.
Cryptocurrencies have been hurt by risk-off sentiment in broader financial markets amid stagflation in the United States, following indications of slowing growth and persistent inflation that have dampened hopes of an interest rate cut by the Federal Reserve. The Federal Open Market Committee is due to deliver its latest rate decision later in the day.
Ether {{ETH}} fell about 5%, dropping below $3,000, while dogecoin {{DOGE}} led the decline among other major altcoins with a 9% drop. Solana {{SOL}} and Avalanche {{AVAX}} both lost about 6%.
Bitcoin plunged in April, posting its first monthly loss since August. The 16% drop is the worst since November 2022, when cryptocurrency exchange FTX imploded, but some analysts are warning of further declines in the immediate future.
10x Research, a digital asset research firm, said it sees selling pressure toward the $52,000 level due to outflows from U.S. cash exchange-traded funds, which have totaled $540 million since the Bitcoin halving on April 20. It estimates that the average entry price for U.S. Bitcoin ETF holders is $57,300, so this could prove to be a key support level.
The closer the bitcoin spot price is to this average entry price, the greater the likelihood of a new ETF unwind, 10x CEO Markus Thielen wrote Wednesday.
“There may have been a lot of ‘TradeFi’ tourists in crypto – pushing longs all the way to the halving – that period is now over,” he wrote. “We expect more unwinding as the average Bitcoin ETF buyer will be underwater when Bitcoin trades below $57,300. This will likely push prices down to our target levels and cause a -25% to -29% correction from the $73,000 high – hence our $52,000/$55,000 price target over the past three weeks.”
The story continues
UPDATE (May 1, 8:56 UTC): Price updates throughout the process.
UPDATE (May 1, 9:57 UTC): Price updates throughout the process.
UPDATE (May 1, 11:05 UTC): Adds analysis from 10x.