Key Points
- Bitcoin’s value has declined due to a variety of macroeconomic factors including rate-cut expectations and a strong U.S. Dollar Index.
- The upcoming bitcoin halving event might impact the digital asset’s value.
The price of Bitcoin has experienced a downward trend due to a combination of macroeconomic factors.
These include diminished expectations of a rate cut, a stronger U.S. Dollar Index, and geopolitical tensions.
Over the past day, Bitcoin’s market value has decreased by more than 3% and is currently trading at $61,471.
Macroeconomic Factors Impacting Bitcoin
Bitcoin’s price drop began after remarks from U.S. Federal Reserve chair Jerome Powell.
He indicated that interest rates would probably stay high for an extended period.
In a forum in Washington, Powell stated that the U.S. central bank is unlikely to achieve its 2% inflation target in the near future.
This could have affected investor enthusiasm for spot bitcoin exchange-traded funds.
The U.S. Dollar Index, which gauges the dollar’s performance against other major currencies, has risen 4.38% since January, reaching a six-month peak.
This is its most significant five-day rally since February 2023.
Bitcoin’s Upcoming Halving Event
Every four years, a mechanism built into the Bitcoin blockchain halves the block reward miners receive.
This means each new block of bitcoin mined approximately every ten minutes will yield 3.125 BTC, a reduction from the current 6.25 BTC block reward.
Based on current estimates, the halving will happen on April 20, 2024, at 03:48 UK time, once the network reaches a block height of 840000.
Historically, many of Bitcoin’s gains have occurred 12 to 18 months after a halving.
For example, at the time of 2020’s halving, one bitcoin was worth less than $10,000. By the peak in 2022, prices had soared to more than $67,000.