Bitcoin In Correction Amid Profit Taking and Fed Meeting Jitters; Crypto Stocks Tank


  • A bitcoin sell-off put it firmly in correction, more than 10% lower than last week’s all-time high.
  • Profit taking after a quick run-up in prices and jitters ahead of the Federal Reserve meeting tomorrow may have been behind the pullback in bitcoin prices.
  • Lower rates would weaken U.S. Treasury yields, making riskier assets such as cryptocurrencies more attractive to investors.
  • Bitcoin’s drop dragged down other crypto-tokens and crypto-related stocks such as MicroStrategy.

Bitcoin (BTC) was trading just a shade under $65,000 Tuesday afternoon ahead of the Federal Reserve’s interest rate decision tomorrow. The sell-off spilled over to the broader crypto markets, dragging down other tokens and crypto-related stocks.

Bitcoin In Correction, Eyes On The Fed

Bitcoin is technically in a correction, which means it’s trading more than 10% lower than its prior high of $73,000 set not a week ago.

And this big move in the largest cryptocurrency by market capitalization has also spilled over into Ether (ETH), Solana (SOL) and Cardano (ADA), which also saw big drops in trade.

Crypto investors are closely watching the Federal Reserve this week for clues about the timing or magnitude of an interest rate cut. Lower rates would weaken U.S. Treasury yields, making riskier assets such as cryptocurrencies more attractive to investors. However, higher rates for longer would hurt the investment case for riskier assets to some extent.

The Bank of Japan also raised rates for the first time in 14 years Tuesday, which could signal potential pressure on U.S. Treasurys. The market is also watching for the consequences of the halving next month when the price of the cryptocurrency is expected to increase.

ETFs Drove The Rally, Not The Correction

The demand for bitcoin generated by spot bitcoin ETFs, which began trading in January this year, was credited for the recent rally in the cryptocurrency’s prices. Despite almost $12 billion in outflows from Grayscale’s Bitcoin ETF Trust (GBTC) since the other ETFs started trading, it’s not the ETFs moving the cryptocurrency, according to Eric Balchunas, a Bloomberg Intelligence ETF analyst.

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