“speculation in the crypto market can play an important role”

After reaching $73,700, bitcoin lost 15% of its value in one week, trading below $63,000 on Tuesday.

Bitcoin has lost some 15% since its last record, weighed down by profit-taking and speculation on the directions of the American central bank (the Fed) expected on Wednesday.

Tuesday, around 12:35 p.m. in Paris, the most popular cryptocurrency fell 6.68% and was trading for $62,853. It reached an absolute record of $73,797 on Thursday following the launch of a new investment product on the American markets. The digital token remains up around 50% year to date.

“Speculative activity on the cryptocurrency market can play an important role,” recalled Walid Koudmani, independent analyst, interviewed by AFP.

“Investors who entered the market earlier may take advantage of rising prices to sell and make profits, thereby contributing to downward pressure on prices,” he explained. The digital asset has already yo-yoed in the past after peaks, falling heavily in 2017-2018, or even at the end of 2022 following a series of sinkings of several giants in the sector.

The Fed, meeting this week starting Tuesday, must make a monetary policy decision on Wednesday. If the American central bank “signals an expected monetary easing in the coming months”, this “should weaken the dollar and push up risky assets” such as cryptocurrencies, noted James Harte, analyst at Tickmill.

“Inflation still too high”

Conversely, if the Fed expresses “further reluctance” about a possible rate cut, “this risks further slowing down bitcoin in the short term”, he estimated. Already last week, “higher inflation than expected had pushed back the stock markets” and cryptocurrencies, recalled Simon Peters, analyst at Etoro, “investors wondering if inflation is still too high” for the Fed begins to lower rates.

However, the price of bitcoin could be supported in April by the “halving”, a technical phenomenon which halves the reward granted to validate transactions on the Bitcoin blockchain, and which occurs approximately every four years, underlined Mr. Harte.