Investing.com – Bitcoin Price Pullback

Bitcoin’s price slipped on Tuesday, retreating from recent gains amid expectations that U.S. interest rates will fall more slowly than initially anticipated.

Market Sentiment

A risk-off sentiment in broader financial markets, particularly in stocks, has impacted crypto prices negatively. Anticipation of more signals from the Federal Reserve and crucial inflation data this week kept traders apprehensive.

Bitcoin fell 0.6% to $62,564.0 by 09:00 ET (13:00 GMT).

The Impact of the Dollar and Rate Expectations

The strength of the dollar has weighed on crypto markets as the greenback nears recent seven-week peaks. The dollar surged after last week’s nonfarm payrolls data indicated a robust U.S. labor market, suggesting a slower pace of rate cuts from the Fed.

Traders are currently pricing in an 81% chance of a 25 basis point cut in November, with a 19% chance of no changes to rates, as per CME Fedwatch. Expectations of a slower rate-cutting trajectory indicate that U.S. rates will remain elevated longer, negatively affecting speculative assets like cryptocurrencies.

Anticipation of Fed Minutes and Inflation Data

Attention is focused this week on forthcoming clues regarding U.S. interest rates. The minutes from the Fed’s September meeting are set to be released Wednesday. The central bank had previously cut rates by 50 basis points, marking the start of an easing cycle, while signaling that future cuts would depend on economic data.

Consumer price index inflation data is scheduled for Thursday and is likely to influence the interest-rate outlook. Additionally, various Fed officials are expected to speak in the coming days.

Decline in Altcoin Prices

In the wider crypto market, most altcoins declined, tracking Bitcoin and reversing gains from the weekend. Notable movements included Ether, which fell 1.5% to $2,427.7. Other altcoins, including SOL, XRP, and ADA, experienced losses between 1.5% and 2.1%. The meme token DOGE saw a drop of around 3.5%.

Despite recent downturns, the crypto market has seen gains driven by optimism regarding a potential Donald Trump victory in the 2024 presidential elections, with Polymarket indicating Trump leading Vice President Kamala Harris 53% to 46.2%. Trump’s pro-crypto stance contrasts with Harris’s expected regulatory crackdown.

FTX Reorganization Plan

Analysts at K33 maintain a bullish outlook for Bitcoin in Q4, supported by solid U.S. jobs data and positive developments in the FTX creditor repayment process, even amid recent market downturns due to Middle East tensions. The U.S. Bankruptcy Court has approved FTX’s reorganization plan, advancing creditor repayments.

Payouts are expected to begin later this quarter or early Q1 2025, with a 60-day window anticipated from the court’s effective date in mid-November. Smaller creditors, with claims under $50,000, will be repaid first, representing about $1.2 billion in assets. Larger creditors are expected to receive their $9 billion payouts in February 2025.

Analysts estimate that 20% to 40% of the remaining $8 billion in claims could re-enter the crypto markets in multiple waves over the coming year, with only a modest overall impact.