Why is the Bitcoin price falling today?

The Bitcoin (BTC) price continues to struggle to make a stable upward movement. Every time the digital currency seems to start an increase, a correction quickly follows.

Since reaching its all-time high (ATH) of nearly $74,000 in March, the BTC price has been fluctuating between $50,000 and $70,000. Several factors, including macroeconomic developments, play a role in the lack of a fresh rally.

Japanese central bank rate hike

A major factor is the uncertainty surrounding upcoming central bank interest rate decisions. While the US Federal Reserve (Fed) is expected to cut rates, the Bank of Japan (BoJ) is poised to hike rates. This could increase pressure on Bitcoin by affecting the “yen carry trade.”

Investors borrow cheaply in yen to invest in higher-yielding assets, such as Bitcoin. A rate hike makes borrowing in yen more expensive, which could lead to the unwinding of these positions and therefore create selling pressure on Bitcoin.

Selling pressure from exchanges and miners

In addition, there is a significant increase in the number of Bitcoins being transferred to exchanges. This creates additional pressure on the market. BTC miners, who are faced with declining revenues, may decide to sell large amounts of their Bitcoin reserves to meet their financial obligations. Since miners hold significant amounts of Bitcoin, this could lead to a sharp drop in the price.

Threat of a US recession

Finally, the threat of a recession has been hanging over the US economy for quite some time. Peter Thiel argues that the US would already be in a recession if the government had stopped its massive government spending earlier. According to Thiel, this situation is unsustainable in the long term. The budget deficit for 2024 was originally expected to be between $1.5 and $1.6 trillion, but is now $400 billion higher than expected.

While a recession may have negative effects on the BTC price in the short term, it can actually have a positive effect in the long term, as Bitcoin is increasingly seen as a hedge against inflation and monetary devaluation caused by government policies.