Bitcoin extended its recent decline on Wednesday as concerns over high U.S. interest rates and weakening investor demand continued to pressure the cryptocurrency market.
The world’s largest cryptocurrency fell 1.5% to approximately $61,542 by 09:50 ET.
Technology Sell-Off Pressures Risk Assets
A sharp decline in technology and semiconductor stocks this week made investors more cautious toward risk-sensitive assets.
However, cryptocurrencies received little support from the rotation away from high-valued technology shares. Investors instead appeared to favor sectors with clearer earnings and fundamental growth prospects.
Federal Reserve Rate Fears Weigh on Bitcoin
Markets remained concerned that U.S. interest rates could stay elevated for longer following hawkish signals from the Federal Reserve’s latest meeting.
Investors are now waiting for the upcoming Personal Consumption Expenditures price index. The PCE inflation report could provide further clues about the Federal Reserve’s future monetary policy.
Higher interest rates generally reduce demand for speculative investments, including Bitcoin and other cryptocurrencies.
Bitcoin ETF Outflows Continue
Bitcoin has traded within a narrow range over the past week, remaining close to its annual lows amid a lack of positive market catalysts.
Continued withdrawals from U.S. spot Bitcoin exchange-traded funds have also weighed on prices. The funds were heading toward their seventh consecutive week of net outflows.
Although the pace of withdrawals has slowed in recent weeks, there have been few signs of a sustained return to capital inflows.
Investors Shift Toward AI Stocks
Artificial intelligence-related stocks have attracted increasing investor interest in recent weeks.
This trend has drawn some capital away from cryptocurrencies and toward companies with more visible revenue, earnings and long-term growth opportunities.
The shift has added pressure to Bitcoin at a time when the wider cryptocurrency market is already struggling to attract fresh investment.
CLARITY Act Could Support Coinbase
Bank of America maintained its “Buy” rating on Coinbase, arguing that upcoming U.S. cryptocurrency legislation could become an important catalyst for the exchange.
The bank said the proposed CLARITY Act could strengthen Coinbase’s position as a leading U.S. partner for traditional financial institutions seeking exposure to blockchain technology.
Bank of America also highlighted Coinbase’s approval, alongside Kalshi, to introduce perpetual futures products in the United States.
The global perpetual futures market is estimated to be three to four times larger than the spot cryptocurrency market. As a result, access to these products could become an important growth driver for Coinbase.
Crypto Legislation Faces Delays
Bank of America said the passage of the CLARITY Act could support cryptocurrency trading volumes and provide a near-term boost to Coinbase’s revenue.
A more favorable regulatory environment under the Trump administration could also support the broader digital asset industry.
However, efforts to advance the legislation through Congress have stalled in recent weeks. Cryptocurrency and banking lobbyists remain divided over stablecoin rules and interest-bearing yield payments.
Altcoins Follow Bitcoin Lower
The broader cryptocurrency market also declined on Wednesday, following Bitcoin’s downward movement.
Ether fell nearly 1% to approximately $1,651, while XRP declined around 2%.
Solana and BNB recorded smaller losses, while Cardano dropped approximately 3.8%.
Among major memecoins, Dogecoin fell around 3.1%, while the Official Trump token declined approximately 2.5%.
