The cryptocurrency market is suffering as Bitcoin has dropped 4% to $66,342, while ETH, SOL and Dogecoin have recorded much larger drops than BTC.
The DXY dollar index, which tracks the greenback's value against major currencies, hit 105 for the first time in four months, bringing its four-week gain to 2.58%. A stronger dollar causes dollar-denominated assets such as bitcoin and gold to decrease in demand. In addition, sustained dollar strength is believed to be causing financial tightening around the world, reducing investors' willingness to take risks.
The Institute for Supply Management's (ISM) Purchasing Managers' Index (PMI) released on Monday showed the scale of factory operations unexpectedly expanded in March, the first growth since March. September 2022.
The PMI rose 2.5 points to 50.3 last month after February's 47.8. The headline figure broke through the resistance zone above 50, snapping out of 16 straight months of recession and weakening the prospect of a rate cut from the Fed. The new orders index also returned to the resistance zone and increased to 55.8%, up 3.3% from 52.5% in February.
The number of Fed rate cuts factored into swaps this year fell below 65 basis points after the manufacturing report. In other words, the market now expects the Fed to withdraw its forecast of three 25 basis point rate cuts in 2024. The probability of the Fed delivering the first rate cut in June has decreased less than 50%.
“However, markets are focused on the ISM report, with 10-year Treasury yields rising 10 basis points thanks to increased manufacturing and higher inflation in the sector. There were about 20 individual Federal Reserve speeches this week, and markets are expecting today's results to make officials wary of easing fiscal policy,” said analysts at ING said in a note to clients on Monday.
Looking ahead Bitcoin could remain volatile for a while as several reports are released this week, including Friday's nonfarm payrolls and unemployment rate figures. Pay special attention to Bitcoin's quadrennial halving event, which will also take place later this month.
VIC Crypto compiled
Related news:
Chinese government launches public blockchain infrastructure platform with Conflux Network
TRON believes that the SEC is exceeding its authority in the Justin Sun case
The Layer 3 Degen Chain fever on Base caused the Token price to increase 50 times in the past month
Micro Strategy raises another $600 million to buy more Bitcoin