Bitcoin (BTCUSD) Briefly Dropped Below $90000 Early Monday, for the First Time Since Mid-November

Bitcoin (BTCUSD) fell below $90,000 early Monday, for the first time since mid-November before recovering slightly, as a wild week of trading ended with bitcoin prices down, despite positive spot bitcoin ETF inflows or MicroStrategy's latest bitcoin buy.

Blame those investor jitters on recent economic data that dashed hopes for rate cuts by the U.S. Federal Reserve, adding to concerns over government plans to sell some of the bitcoin it seized.

Just last Monday, the cryptocurrency topped the $100,000 price level, before declining to trade around $95,000 over the weekend. Since then, hotter-than-expected labor market data points to a lower chance of the Fed bringing down rates.

Bitcoin had been rallying in recent months on hopes for the Fed cutting interest rates again this year. Those hopes were dashed after recent economic data showed continuing strength in the labor market and hotter-than-expected inflation.

Now, traders are pricing in a lower chance of the Fed cutting rates again in 2024. At the beginning of the year, traders had expected another rate cut by the second half of this year.

Bitcoin prices had been rallying in recent months on hopes for the Fed cutting interest rates again this year. Those hopes were dashed after recent economic data showed continuing strength in the labor market and hotter-than-expected inflation.

Now, traders are pricing in a lower chance of the Fed cutting rates again in 2024. At the beginning of the year, traders had expected another rate cut by the second half of this year.

Bitcoin is Sensitive To Interest Rates

In the past, sentiment around the future of interest rate policy from the Fed has been a key factor in price movements in both directions for risk-on assets such as bitcoin.

This is at least partially due to the increased attractiveness of treasury yields in a high interest rate environment. In lower interest rate environments, investors tend to move to riskier assets in search of higher returns.

Bitcoin's recent price performance also comes amid reports of a federal judge allowing the U.S. Government to sell some of the bitcoin and other cryptocurrencies it seized during enforcement actions.

The late December ruling caught public attention last week, as investors began worrying that roughly 69,370 bitcoins - worth about $6.5 billion at recent prices - could hit the market soon, sending bitcoin prices lower.

There can only ever be 21 million bitcoins and the cryptocurrency's price levels get influenced by sudden demand and supply changes. A sudden influx of bitcoins in the market could in theory drag its price down temporarily. However, some experts said that those worries may be unfounded.

While Glassnode founders recently suggested that the seized currency would likely be auctioned instead of coming to crypto exchanges, CEO of analytics fim CryptoQuant said investors should not panic as the amount of bitcoin in question could be "absorbed in just a week."

Bitcoin Prices Still Above 2022 Lows

Bitcoin prices are still down more than 40% from all-time highs near $20,000 reached in March of last year.

However, recent prices are also well above 2022 lows around $15,500, reached during the FTX fallout in November.

Bitcoin's recent recovery from 2022 lows has been fueled by several factors, including a calming of markets after the FTX blowup, continuing inflation and a weaker dollar.

Bitcoin's recent recovery from 2022 lows has been fueled by several factors, including a calming of markets after the FTX blowup, continuing inflation and a weaker dollar.

Bitcoin's recent recovery from 2022 lows has been fueled by several factors, including a calming of markets after the FTX blowup, continuing inflation and a weaker dollar.

Bitcoin's recent recovery from 2022 lows has been fueled by several factors, including a calming of markets after the FTX blowup, continuing inflation and a weaker dollar.

Bitcoin's recent recovery from 2022 lows has been fueled by several factors, including a calming of markets after the FTX blowup, continuing inflation and a weaker dollar.

Bitcoin's recent recovery from 2022 lows has been fueled by several factors, including a calming of markets after the FTX blowup, continuing inflation and a weaker dollar.

Bitcoin's recent recovery from 2022 lows has been fueled by several factors, including a calming of markets after the FTX blowup, continuing inflation and a weaker dollar.

Bitcoin's recent recovery from 2022 lows has been fueled by several factors, including a calming of markets after the FTX blowup, continuing inflation and a weaker dollar.

Bitcoin's recent recovery from 2022 lows