“Bitcoin hit a new low following its weakest monthly performance since late 2022,” – commented Matteo Greco, a Fineqia research analyst, on the recent drop in cryptocurrency prices. The primary reason for the decline is the mass position closing by investors ahead of the U.S. Federal Reserve’s interest rate decision.

In April, the value of Bitcoin fell nearly 16% as investors took profits following a sharp price rise that pushed asset values to record highs above $70,000. Now, with the latest price at $57,055, Bitcoin is officially in a bear market, as its value has fallen more than 22% from the March high of $73,803.

Greco added: “The recent downtrend can be attributed to increased profit-taking by investors who entered the market during the downturns of 2022 and 2023, as well as ETF investors who saw significant price appreciation on their shares after entering the market in early 2024.”

On the macro level, no changes in rates are expected from the Fed today, but among investors, the sentiment is strengthening that the central bank may not cut rates at all this year, which would negatively impact rate-sensitive assets, including cryptocurrencies, emerging market stocks, and even commodities.

“Given these developments, the current rise in Bitcoin prices is really driven by these hopes, and the rally could continue, as valuations have been depressed for quite some time,” Greco concludes.