Bitcoin Slumps as Rate Hike Fears Mount Amid Fragile Recovery

Bitcoin tumbled as concerns over higher interest rates weighed on risk sentiment, prompting investors to pull back from digital assets. The largest cryptocurrency fell by up to 2.9% to $63,018, its lowest level in 11 days. Citadel Securities expects the US Federal Reserve to raise rates by a quarter percentage point, which would strengthen Chairman Kevin Warsh's credibility in the battle with inflation.

Traders see a roughly one-in-three chance of a rate hike, and rising borrowing costs tend to drive investors away from risk assets such as cryptocurrencies. Caroline Mauron, co-founder Orbit Markets, said Bitcoin is getting hit by 'the rising probability of a Fed hike, as well as macro concerns about AI-related credit risks.'

The next level to watch on the downside is $62,000, with strong support expected around $60,000, according to Mauron. Heavy outflows from US-listed Bitcoin exchange-traded funds late last week underscore the fragility of its recent recovery.