Why Is Bitcoin Down Today? (2024)

Bitcoin (BTC) is continuing its downward trend today as crypto investors digest the results of the latest Federal Open Market Committee, or FOMC, meeting. After the Fed held interest rates steady at the June meeting, many have lost hope for significant rate cuts before the end of the year, sending crypto down.

Although bitcoin is still up more than 45% year-to-date, the world’s oldest cryptocurrency is down more than 5% over the past 24 hours. This means bitcoin—which soared to an all-time high above $73,000 in March—is back down to $61,000.

Ethereum (ETH), the world’s leading altcoin, is also down more than 5% over the past 24 hours, bringing ETH’s price back down to about $3,300. Bitcoin’s price decline has affected almost the entire cryptosphere.

Other leading altcoins are down as well. Solana (SOL) and BNB Coin (BNB) are each down 3%. Cardano (ADA) is down more than 2%, while XRP (XRP) is down 1%.

Why Is Bitcoin Down Today?

Bitcoin began its latest descent following the June FOMC meeting. The Fed held the federal funds rate steady, erasing any hopes of a rate cut in the first half of the year and spooking some crypto investors.

Lower interest rates tend to allow cash to flow into more speculative assets such as cryptocurrency, increasing the value of those assets.

Bitcoin’s price dip today is a continuation of that trend that began after the June FOMC meeting. Over the past two weeks, outflows from crypto exchange-traded funds, or ETFs, have reached $1.2 billion. Bitcoin is down more than 6% over the past week.

As the crypto industry weighs the Fed’s latest interest rate decision, it is also anxiously awaiting another key metric. The May personal consumption expenditures, or PCE, price index is due this Friday. This is the Fed’s preferred inflation gauge, and therefore can have a significant impact on markets.

The crypto market is typically nervous before the PCE release, and investors will be looking for a positive sign that inflation is under control and that a rate cut may come at the next FOMC meeting.

Although this recent bitcoin decline likely won’t have any major effects on the cryptocurrency’s overall price trajectory, any negative news from the PCE report could hinder bitcoin’s recent strong performance over the short term.

Bitcoin Has Been in a Bull Market Since November

Bitcoin has been on a major bull run since November of last year. It climbed from $34,000 at the end of October to more than $73,000 in March.

After the U.S. Securities and Exchange Commission approved 11 new spot bitcoin exchange-traded funds on January 10, bitcoin uptrended, gaining more than 50% this year alone.

ETFs, like mutual funds, are baskets of securities that investors can trade as a single investment. However, unlike mutual funds, ETFs are traded directly on stock exchanges throughout the market day.

Cryptocurrencies themselves trade 24/7 because, unlike stocks and commodities, the crypto market is not a regulated exchange. It occurs across a decentralized network of computers.

Bitcoin ETFs—whether spot or focused on futures—only trade during market hours.

A spot ETF differs from a futures ETF in that a spot ETF tracks the current price of the underlying asset, while a futures ETF tracks potential future prices of the underlying asset.

Futures ETFs deal in the trading of futures, which are complex derivatives products best suited for direct trading only by experienced investors.

Is Cryptocurrency a Safe Investment?

Cryptocurrency markets saw a tremendous resurgence in 2023, with Bitcoin closing the year up 156%. In many investors’ opinions, this rebound put an end to 2022’s crypto winter, which was exemplified by the rapid collapse of crypto exchange FTX in November 2022.

As a result of FTX’s collapse and other circ*mstances, U.S. regulators cracked down on exchanges and other companies trading in and creating cryptocurrencies.

The SEC chair, Gary Gensler, has said in the past that his agency believes most cryptocurrencies are in fact securities and hence fall under the purview of a plethora of already-existing rules and legal precedents.

This claim has been further asserted in filings by the SEC against a handful of crypto exchanges and companies—including Binance and Coinbase—alleging that those entities were dealing in the unlicensed sale and transfer of securities.

However, Gensler and the SEC have also stated that bitcoin itself is probably a commodity—not a security—and should be regulated by the CFTC, not the SEC.