Focus was also directed towards the impending halving event and its potential impact on the long-term supply of Bitcoin.
Over the last 24 hours, Bitcoin experienced a 3.3% decline, dropping to $61,767.3 as of 00:46 ET (04:46 GMT).
Currently, all eyes are on the halving event scheduled to occur upon the generation of block no. 840,000 within the Bitcoin blockchain. With less than 300 blocks remaining until the event, the halving is anticipated to occur around April 20.
This significant event will decrease the rate of new Bitcoin issuance by cutting the rewards for miners in half.
The halving reinforces the narrative that Bitcoin’s limited supply will contribute to supporting the token’s value.
Despite Bitcoin’s substantial appreciation over the past 12 years, there seems to be limited direct correlation between the previous three halving events and immediate price surges in Bitcoin.
Factors external to the cryptocurrency market, such as interest rates and risk appetite, have seemingly had a more substantial impact on Bitcoin’s price trends, particularly its tendency to mirror movements in U.S. technology stocks.
While much of Bitcoin’s recent gains were attributed to the U.S. greenlighting spot exchange-traded funds, this momentum appears to be waning.
Both Bitcoin and the broader cryptocurrency market have predominantly flourished in environments characterized by low-interest rates and high liquidity, conditions that are expected to materialize towards the latter part of 2024.
The wider cryptocurrency market experienced sustained losses as traders tempered their expectations for a Federal Reserve interest rate cut in June, influenced by robust inflation data and hawkish signals from Fed officials.
Despite a slight weakening of the U.S. dollar, cryptocurrency prices failed to capitalize on the opportunity as traders opted to secure profits following a 5-1⁄2-month high for the greenback.
Ethereum, the second-largest cryptocurrency, saw a 3.3% decline, settling at $3,009.41, while Solana and XRP experienced losses of 5% and 0.1%, respectively.
The gains in the cryptocurrency market this year have been predominantly skewed towards Bitcoin following the approval of spot ETFs, with Bitcoin constituting over 55% of the total market capitalization in the crypto sphere.