Fed Hawkishness and Geopolitical Tensions Weigh on Bitcoin
Bitcoin traded relatively steady on Thursday, hovering near the $64,000 level after staging a modest recovery earlier in the week. The cryptocurrency received some support from fresh inflows into US spot Bitcoin exchange-traded funds (Spot Bitcoin ETFs), but analysts caution that renewed inflation concerns and escalating tensions between the United States and Iran continue to limit its potential for further gains.
The Federal Reserve left its benchmark interest rate unchanged at 3.50%-3.75% on Wednesday, aligning with market expectations. However, three members of the Federal Open Market Committee dissented in favor of a 25-basis-point rate hike, indicating growing concern within the central bank over persistent inflationary pressures.
Federal Reserve Chair Kevin Warsh struck a hawkish tone during his post-meeting press conference, bolstering the US dollar and reducing investor appetite for riskier assets, including cryptocurrencies. The ongoing conflict between the United States and Iran has fueled volatility in oil markets, with concerns mounting over potential disruptions to energy supplies through key maritime chokepoints.
Despite these challenges, analysts believe that continued net inflows into US-listed spot Bitcoin ETFs could support a broader recovery in Bitcoin and help it resume its upward trend. The data showed a modest improvement in institutional demand, with US-listed spot Bitcoin ETFs recording net inflows of $32.11 million on Wednesday.