Bitcoin experienced a noticeable decline on Thursday, following a fleeting rebound earlier in the week, as investors remain on edge ahead of crucial U.S. economic data that could influence the Federal Reserve’s interest rate decisions. The leading cryptocurrency by market capitalization was trading at approximately $111,786 (£82,015), marking a 0.7% decrease and slipping below the $112,000 mark during early trading hours in Asia. It had recently approached $114,000 but quickly lost momentum.
This downturn follows a troubling wave of forced sell-offs experienced earlier this week, attributed to traders who had heavily leveraged their positions in Bitcoin, leading to substantial losses estimated around $1.5 billion across various crypto exchanges. The combination of thin market liquidity and considerable speculative trading exacerbated the situation, causing Bitcoin to plummet from above $115,000 to the low $112,000s in just 24 hours.
Investors are treading cautiously as Fed Chair Jerome Powell highlighted the inherent risks of monetary policy, warning that there is “no risk-free path.” He emphasized the potential hazards of either easing too quickly or holding back for too long. This sentiment has resonated with other Fed officials, leading to a data-dependent approach that has dampened investor enthusiasm for riskier assets.
Current market anticipations, as reflected by the CME FedWatch tool, suggest traders expect the Fed to lower rates from the existing 4.5%–4.75% range to around 3.5% to 4.0% by the end of 2025. With this in mind, investors are keenly awaiting new U.S. economic indicators, including weekly jobless claims and a final reading of Q2 GDP on Thursday. Additionally, the Fed’s favored inflation measure, the PCE price index, is set to be released on Friday.
The broader crypto market has also felt the sting of recent losses, with Ethereum falling 4% to $4,013.33—its lowest in seven weeks. Other cryptocurrencies followed suit, with Solana and Cardano down by 3.2% and 2.7%, respectively, while Polygon decreased by 2.5%. Notably, memecoins also faced declines, with Dogecoin dipping 2% and the Official Trump token down 1.5%. XRP remained relatively stable at $2.85.
Timothy Misir, head of research at BRN, pointed to the Fed’s cautious perspective as a response to “sticky inflation risks” and resilient consumer demand. He mentioned China’s recent decision to hold sovereign gold reserves as part of a broader trend toward de-dollarisation, which could impact cryptocurrencies as an emerging global asset class.
In the ongoing landscape of exchange-traded fund (ETF) flows, Bitcoin ETFs saw a reversal with $241 million in net inflows on Wednesday, countering previous outflows. Conversely, Ethereum ETFs faced $79 million in redemptions. Misir noted that on-chain signals for Bitcoin remain fragile, pointing out that it is trading below the historically significant 0.95 Cost Basis Quantile. This position indicates that profit-taking may occur, putting the token at risk of further declines toward the $105,000–$90,000 range if current support levels falter.
“There are three critical risks to monitor: Bitcoin maintaining its position above $111,000, Ethereum keeping above $4,000, and the state of ETF flows,” Misir warned. “Should these levels be breached, a swift downward momentum could unfold. For now, the $111,115–$113,500 range effectively defines the battleground for Bitcoin.”
