Bitcoin Trades Around $57K, Crypto Market Drops 6% in Run-Up to Fed Decision

Bitcoin (BTC) traded around $57,700 during the European morning on Wednesday after sinking to the lowest level since the end of February as the world’s largest cryptocurrency recorded its worst month since November 2022.

BTC has fallen about 6.3% in the past 24 hours having dropped below the $60,000 support level late on Tuesday, CoinDesk data show. The wider crypto market, as measured by the CoinDesk 20 Index (CD20), lost almost 9% before recovering some of the decline.

Cryptocurrencies have been dogged by risk-off sentiment in the broader financial markets amid a stagflationary feel in the U.S. following indications of slower growth and sticky inflation that have tapered hopes of an interest-rate cut by the Federal Reserve. The Federal Open Market Committee is due to give its latest rate decision later today.

Ether (ETH) slipped about 5%, dropping below $3,000, while dogecoin (DOGE) led declines among other major altcoins with an 9% slide. Solana (SOL) and avalanche (AVAX) both lost about 6%.

Bitcoin fell in April, returning its first monthly loss since August. The 16% drop was the worst since November 2022, when crypto exchange FTX imploded, but some analysts are warning of further downside in the immediate future.

Digital asset research firm10x Research said it sees selling pressure toward the $52,000 level based on outflows from the U.S. spot exchange-traded funds, which have totaled $540 million since the Bitcoin halving on April 20. It estimates that the average entry price of U.S. bitcoin ETF holders is $57,300, which could therefore prove to be a key support level.

The closer the spot price of bitcoin is to this average entry price, the greater the likelihood of further ETF unwinding, 10x CEO Markus Thielen wrote on Wednesday.

“There might have been a lot of ‘TradeFi’ tourists in crypto – pushing longs until the halving – this time is now over,” he wrote. “We expect more unwinding as the average Bitcoin ETF buyer will be underwater when Bitcoin trades below $57,300. This will likely lower prices to our target levels and cause a -25% to -29% correction from the $73,000 top – hence our price target of $52,000/$55,000 during the last three weeks.”

UPDATE (May 1, 8:56 UTC): Updates prices throughout.

UPDATE (May 1, 9:57 UTC): Updates prices throughout.

UPDATE (May 1, 11:05 UTC): Adds analysis from 10x.