Bitcoin’s Wild Ride: What’s Next for the Crypto Market?

As I write this, Bitcoin is hovering around $66,000, down nearly 5% over the past 24 hours. The crypto market is on edge, bracing for the Federal Reserve’s interest rate decision and the May Consumer Price Index (CPI) report. It’s going to be a wild ride, folks!

The crypto market has been on a rollercoaster ride lately, with Bitcoin dipping to a three-week low of $66,170. Altcoins have taken an even bigger hit, with Ethereum’s ether breaking below $3,500 and solana, dogecoin, Cardano’s ADA, and Chainlink’s LINK all suffering 6%-9% losses.

Bitcoin’s recent price action

The sudden pullback has resulted in over $250 million in liquidations of leveraged derivatives trading positions across all crypto assets. This is the second significant leverage flush in a week, following Friday’s $400 million liquidations.

So, what’s behind this sudden downturn? Investors are de-risking ahead of tomorrow’s CPI report and Fed meeting, according to hedge fund QCP. The market is on high alert, waiting to see how many rate cuts policymakers are projecting for this year.

“The stage is set for a frantic macro-Wednesday, with both May CPI data and the FED’s interest rate decision poised to move the market,” K33 Research noted in a Tuesday market update.

But don’t count Bitcoin out just yet. Despite the short-term headwinds, there are signs that the crypto market could be due for a rebound. Bitcoin has seen multiple pullbacks this year before FOMC meetings, only to reverse the move soon after.

Bitcoin futures open interest on BitMEX and Binance

“Despite short-term headwinds, we think this might be a good opportunity to accumulate coin,” QCP said.

So, buckle up, crypto enthusiasts! It’s going to be a wild ride, but with a little luck and some smart investing, we might just come out on top.