The Bitcoin (BTC) price recently lost momentum, dropping below $36,000, as it charts a different path from the stock market which impressed investors amid lower-than-expected inflation figures.
The poor performance in Bitcoin’s price stems from the waning enthusiasm around the BTC spot ETF pursuit. With the recently identified Bitcoin spot ETF’s narrow approval window closing, it appears the US Securities and Exchange Commission (SEC) will extend the industry’s wait time for a decision.
Bitcoin (BTC) Falls on Positive Macroeconomic Trends
Bitcoin recorded one of its poorest performances for the month in the past 24 hours when its price dropped as low as 3.7%, touching $35,300 at a point. Though Bitcoin price has found an anchor, its value remains suppressed, down 0.98% at press time to $36,131.97. However, the coin’s trading volume is up 26% to $24,678,584,741.
This knee-jerk reaction from Bitcoin bulls comes amid the revelation that US inflation has slumped to 3.2%, the lowest level recorded this year. With this impressive reading, Wall Street investors went on a stock buying rampage as a low inflation rate suggests that the Federal Reserve might halt further aggressive interest rate hikes.
With this run, the S&P 500, an index that tracks 500 of the biggest stocks in the US, soared 1.8% while the Nasdaq Composite printed a 2.3% surge. To complement this rally, the 10-year Treasury yield dropped 4.4% or by 20 basis points.
With the optimism on Wall Street, investors drew attention away from Bitcoin and the crypto market in general, accounting for the drop in prices.
Price Will Not Stay Down
According to expert projections, the fall in the price of Bitcoin is a temporary development. Notably, Grayscale revealed in a recent report that low inflation and bond yields might be beneficial for crypto moving ahead.
The thesis hinges on the possibility that interest rates will peak and conversations around Bitcoin spot ETF will improve. Bloomberg analysts have projected a 90% probability of securing approval by January 24 and the current consensus among market leaders is that when the approval is granted, it can catalyze BTC’s price and possibly spark the next bull market.
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