Bitcoin slipped under the $67,000 level early Wednesday, extending a broader pullback across major cryptocurrencies as investors reassessed the outlook for U.S. monetary policy.
The world’s largest digital asset dropped 3.1% over the past 24 hours to $66,804 as of 1:13 a.m. ET, according to market data. Ether declined 4.1% to $1,965, while XRP and BNB fell 4.3% and 4.5%, respectively.
Hawkish Signals Pressure Risk Assets
Market analysts pointed to shifting expectations around U.S. macroeconomic policy as the main driver behind the selloff.
Andri Fauzan Adziima, research lead at crypto exchange Bitrue, said sentiment turned more cautious following what he described as a “hawkish shift in Fed expectations” tied to Kevin Warsh’s nomination as Federal Reserve chair. The move, he noted, signals the possibility of tighter liquidity conditions and fewer interest rate cuts ahead.
In risk-sensitive markets like crypto, expectations of prolonged higher rates often dampen investor appetite. Traders are now watching whether bitcoin can stabilize in the $60,000 to $65,000 range, a zone some analysts see as technical support, or whether renewed signs of macroeconomic easing might trigger a rebound.
Leverage Flushes Out of the System
Derivatives data suggests that part of the decline may also reflect a reset in market positioning.
Vincent Liu, chief investment officer at Kronos Research, said exchanges experienced significant deleveraging as prices fell. Funding rates indicate that many leveraged positions have been cleared, potentially reducing the risk of cascading liquidations in the near term.
Still, Liu noted that large institutional investors appear cautious. Capital flows suggest many are waiting for stronger catalysts, such as sustained momentum in exchange-traded funds or clearer macroeconomic signals, before increasing exposure.
On Tuesday, spot bitcoin ETFs recorded $166.56 million in net inflows, up from $145 million the previous day, according to SoSoValue data. Spot Ethereum ETFs saw more modest inflows of $13.82 million, compared with $57 million on Monday. While positive, the figures have yet to shift broader market sentiment.
Mixed Signals From Global Markets
The crypto downturn comes against a mixed backdrop in traditional markets.
In Asia, equities traded higher Wednesday morning. South Korea’s Kospi climbed 1.24% by midday, and Hong Kong’s Hang Seng index gained 0.42%. Japanese markets were closed for a public holiday.
U.S. stocks delivered uneven results on Tuesday. The S&P 500 fell 0.33%, and the Nasdaq Composite declined 0.59%, while the Dow Jones Industrial Average edged up 0.1%. The divergence followed weaker-than-expected U.S. retail sales data, which showed consumer spending remained flat in December.
Investors are now turning their attention to upcoming U.S. labor market data scheduled for release Thursday. According to Liu, the report could provide fresh clues about the direction of interest rates and broader risk appetite across markets.
