Bitcoin is in the red ahead of the new week.
Despite several crypto positives in the past week, from the SEC’s shifting regulatory stance to President Donald Trump’s establishment of a crypto working group, Bitcoin is in the red ahead of the new week.
At the time of writing on Monday, January 27, Bitcoin is trading around $98,600, representing a 7% decline from Sunday’s high of about $105,500.
The market jitters come amid several significant global economic developments expected this week.
Bitcoin Decline Comes Amid Macroeconomic Uncertainty
These developments include the U.S. interest rate decision following the Federal Open Market Committee (FOMC) Meeting, the ECB interest rate decision, and the U.S. Personal Consumption Expenditure index, slated for release on Wednesday, Thursday, and Friday, respectively.
Bitcoin’s price reaction suggests that traders are taking profits and erring on the side of caution ahead of these releases, as economists do not see these major central banks turning dovish just yet.
Per TRADING ECONOMICS forecasts, both the Federal Reserve and the European Central Bank could maintain current interest rates as they continue to target 2% inflation. This could keep investors cautious and averse to risk assets like Bitcoin in the short term.
Further complicating the outlook is the month-on-month core PCE index, which economists predict will see a 0.1% uptick to 0.2%. This could bolster the Fed’s confidence in keeping rates steady or even considering a hike, as some have recently alluded to.
Possible Federal Reserve Rate Hike?
Speaking on a panel at the World Economic Forum in Davos, Switzerland, on Friday, January 24, BlackRock CEO Larry Fink contended that there was a possibility of a rate hike in the coming year.
Fink argued for such an outcome, citing the continued resilience of the U.S. economy and the bond market.
The BlackRock chief is not the first to express this view. Following higher-than-expected jobs numbers released earlier in the month, Bank of America argued that the Fed was now more likely to raise rates than continue cutting.
Beyond interest rate concerns, recent speculation that the U.S. AI sector is overvalued may also be driving risk-off sentiment, which may be spilling over into the Bitcoin market.
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