Bitcoin Plunges Amid Dollar Strength
Bitcoin’s Decline
Bitcoin plummeted in early Asian trading on Tuesday following new U.S. economic data that boosted the dollar to its highest level in over four months.
The cryptocurrency dropped over 4% in the past 24 hours, hitting $66,495.8 by 04:49 ET (08:49 GMT), falling below the stable range of $68,000 to $72,000.
USD Strength
The U.S. dollar index, which measures the dollar against major currencies, surpassed 105 for the first time since mid-November. This surge was driven by a surprising increase in ISM manufacturing PMI figures for March.
Factory activity rose for the first time since September 2022, challenging expectations of Federal Reserve rate cuts. The uptick in new orders and the prices index further indicated a strengthening economy.
Market Reaction
Following the report, market expectations for Fed rate cuts adjusted, reducing the likelihood of a cut in June to below 50%. A stronger dollar makes assets like Bitcoin less appealing, leading to decreased demand and global financial tightening.
Bitcoin’s price drop rippled through the crypto market, causing altcoins like Ethereum and Cardano to also slide. The broader market experienced significant liquidations.
Market Volatility
The outlook for crypto adoption remains optimistic despite the market drop. Automated trades and derivatives play a significant role in triggering sell-offs, but the fundamentals of cryptocurrencies remain strong.
The total crypto market cap decreased by 5.3% to $2.62 trillion, reflecting the market-wide downturn.
Please sign up for our newsletter to receive the latest updates on financial news! 🚀📉
