SPECULATIVE zeal in the crypto market is faltering as the path to looser monetary policy in the US becomes more challenging.
Coins earlier favoured by the meme-trading crowd such as Pepe, dogwifhat and Bonk slumped over the past 24 hours, consigning a gauge of smaller digital assets to its biggest tumble on Monday (Apr 1) in more than two weeks.
The retreat adds to signs that a steep crypto rally, including a Bitcoin jump to a record high, has lost some impetus as April begins. A more cautious mood is evident across global markets amid lingering US price pressures, which have led investors to curb wagers on looser Federal Reserve monetary settings.
The prospect of fewer Fed interest-rate cuts is having an impact “across crypto, where there has been a sell-off as the week gets underway – no sector is unaffected, especially those where prices have outperformed Bitcoin over last six months, for example memes”, said Stefan von Haenisch, head of trading at OSL SG in Singapore.
Bitcoin has shed about 6 per cent since hitting a peak of US$73,798 in mid-March. A flood of inflows into US spot-Bitcoin exchange-traded funds has begun to cool, weighing on the largest digital asset.
The supply of new Bitcoin tokens is set to halve this month, a four-yearly event that some traders view as a prop for the original cryptocurrency.
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Bitcoin changed hands at US$69,420 as at 9.58 am on Tuesday in Singapore, extending a drop of about 1.5 per cent from the prior trading session in the US.
An index of the top 100 digital tokens rose 61 per cent in January to March, the biggest gain since the equivalent period in 2021. Investors now anticipate fewer Fed rate reductions, lifting Treasury yields and the US dollar, a backdrop that poses an obstacle for speculative markets such as crypto. BLOOMBERG
