Bitcoin recovered marginally on Wednesday but remained under pressure after posting steep quarterly losses as investors stayed cautious toward cryptocurrencies amid mounting expectations that U.S. interest rates will remain higher for longer.
Bitcoin rose 0.17 percent to $58,625 by 11:23 GMT, after earlier falling to a 22-month low of $57,803. Over the past month, the world’s largest cryptocurrency fell over 20 percent.
Bitcoin’s losses for the year hit nearly 33 percent
Sentiment toward digital assets was weighed down by continued investor preference for artificial intelligence-related investments, while uncertainty surrounding a potential renewal of U.S.-Iran peace talks fueled broader risk aversion.
Persistent institutional outflows from spot Bitcoin exchange-traded funds added to the selling pressure, with ETFs on track to record an eighth straight week of net withdrawals.
Bitcoin tumbled 20.30 percent during the second quarter, taking its losses for the year to nearly 33 percent, as the cryptocurrency remained under pressure from persistent macroeconomic headwinds. The crypto was also trading more than 50 percent below its record high reached in October, with few bullish catalysts in sight.
Growing expectations for higher interest rates pressure crypto market
Much of the recent weakness stemmed from growing expectations that U.S. interest rates will remain elevated, reducing the appeal of non-yielding assets such as cryptocurrencies.
Those expectations strengthened after the Federal Reserve adopted a more hawkish tone at its June policy meeting, prompting investors to price in at least one rate hike before the end of the year and weighing on digital asset markets.
Investors are now awaiting remarks from Federal Reserve Chair Kevin Warsh later on Wednesday for further insight into the outlook for the U.S. economy and monetary policy.
Demand for cryptocurrencies was also dampened by the rising appeal of high-performing AI-linked equities in recent months, as investors increasingly favored risk assets backed by stronger fundamentals over more speculative plays.
This trend has been reflected in sustained institutional selling of spot Bitcoin exchange-traded funds, which have recorded seven straight weeks of outflows, with a potential eighth week now in sight.
Crypto markets trade mixed amid lack of positive catalysts
Broader cryptocurrency markets traded mixed on Wednesday, lacking fresh positive catalysts, while most altcoins continued to absorb heavy losses from the previous quarter.
Ether, the second-largest cryptocurrency, gained 0.16 percent to $1,571.86, while XRP was broadly unchanged at $1.0400.
Solana and Cardano outperformed the wider market, gaining 2.21 percent and 5 percent, respectively, whereas Binance’s BNB declined 0.74 percent.
In the memecoin segment, Dogecoin fell 0.50 percent.
