Bitcoin weakened sharply on Monday, retreating from its current resistance level of around $118,000. Investors have stopped reacting to the recent interest rate cuts by the US Federal Reserve and are now looking for clearer signals about the true state of the US economy.
Altcoins under pressure and doubts about corporate reserves
Over the past week, bitcoin has seen virtually no significant movement, as gains driven by optimism about monetary policy have been offset by concerns about its future direction.
Altcoins suffered even more significant losses on Monday. Ethereum fell by almost 10%, reflecting increased investor nervousness in the market. Sentiment was further affected by the news that Praetorian Group International pleaded guilty to the US Department of Justice for operating a Ponzi scheme that defrauded more than 90,000 investors of at least $62 million. At the same time, doubts are growing about corporate reserves in Bitcoin, especially at Strategy, where questions about the long-term sustainability of this investment strategy are increasingly being raised.
Powell dampens euphoria: Bitcoin reacts with a decline after interest rate cut
The current decline in Bitcoin comes shortly after the Federal Reserve’s decision to cut interest rates by 25 basis points. This move initially boosted interest in risky assets as it weakened the dollar and reduced financing costs. However, subsequent comments by Fed Chairman Jerome Powell significantly dampened expectations that the central bank would continue its aggressive monetary policy easing, as he emphasized that further action would depend on economic data.
Investors are now closely watching the speeches of more than ten Fed officials, including Powell himself, whose comments could indicate the future direction of monetary policy. In addition, the PCE price index, the US central bank’s preferred inflation indicator, will be released on Friday. If Fed officials strike a hawkish tone, it could put further pressure on bitcoin and other risk assets. Conversely, signs of further interest rate cuts could reignite positive sentiment in the markets.
