Bitcoin extended its decline on Tuesday, reversing more of its weekend recovery as concerns over higher US interest rates and continued institutional selling weighed on the cryptocurrency market.
Optimism surrounding US-Iran peace negotiations also weakened. Investors remained cautious while waiting for further discussions on a broader peace agreement.
Bitcoin fell 1.2% to approximately $63,468 during early trading.
Federal Reserve Rate Fears Pressure Bitcoin
Cryptocurrency markets remained under pressure following hawkish signals from the Federal Reserve.
At last week’s meeting, most policymakers reportedly supported raising interest rates before the end of the year.
Higher interest rates often reduce demand for speculative and non-yielding assets such as Bitcoin. They can also strengthen the US dollar and make lower-risk investments more attractive.
As a result, expectations of tighter monetary policy continued to limit demand across the crypto market.
Bitcoin ETF Outflows Continue
Institutional investors continued withdrawing money from spot Bitcoin exchange-traded funds following six consecutive weeks of heavy outflows.
Investors removed nearly $160 million from spot Bitcoin ETFs during the first part of the week, according to SoSoValue data.
Although the pace of withdrawals has recently slowed, the continued outflows suggest that institutional demand for Bitcoin remains fragile.
Persistent ETF selling has also made it more difficult for Bitcoin to establish a sustained price recovery.
US Retail Demand Remains Weak
Bitcoin received little support from retail investors in the United States.
The Coinbase Premium Index showed that Bitcoin continued to trade at a significant discount on Coinbase compared with global exchanges.
The index compares Bitcoin prices on Coinbase, one of the largest US cryptocurrency exchanges, with prices in international markets.
A negative premium generally indicates weaker demand from US-based investors. The latest reading suggests that retail interest remains subdued following this year’s sharp cryptocurrency sell-off.
Altcoins Decline Alongside Bitcoin
The broader cryptocurrency market followed Bitcoin lower as investors reduced their exposure to riskier assets.
Ether, the world’s second-largest cryptocurrency, declined by 1.9% to approximately $1,703. XRP fell by around 1.5%.
Solana, Cardano and BNB recorded losses ranging from 1.1% to 4.6%.
Memecoins also moved lower. Dogecoin declined by 3.1%, while the Official Trump token fell by 5.4%.
Crypto Traders Await Key US Data
Market attention is now turning toward several important US economic reports that could influence the Federal Reserve’s interest-rate outlook.
US Purchasing Managers’ Index data for June is scheduled for release later on Tuesday. The report could provide fresh information about activity across the manufacturing and services sectors.
The May Personal Consumption Expenditures Price Index is due on Wednesday. The PCE Price Index is the Federal Reserve’s preferred measure of inflation.
A stronger-than-expected inflation reading could reinforce expectations of another interest-rate increase later this year. This could place additional pressure on Bitcoin and other cryptocurrencies.
However, weaker inflation data may reduce rate-hike fears and provide some relief to risk assets.
