Crypto washout sends bitcoin below $58,000 into bear market

London: Bitcoin fell for a third day on Wednesday, having posted its worst monthly performance in April since late 2022, as investors pulled money out of cryptocurrencies ahead of an interest rate decision by the Federal Reserve later.

The value of the world's most traded cryptocurrency fell by nearly 16% in April, as investors booked profits on a sizzling rally that has taken the price to record highs above $70,000.

Bitcoin was last down 4.7% to $57,055, its lowest since late February, while losses in ether were more modest, down 3.6% at $2,857, also at its weakest since February.

The price of bitcoin is now a full 22% below March's record of $73,803, technically putting it in a bear market. But it is still up 35% so far this year and double where it was this time last year, thanks in large part to the billions of dollars flowing into newly minted exchange-traded funds since January.

"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 witnessed significant price appreciation on their shares after entering the market in the early weeks of 2024," Fineqia research analyst Matteo Greco said.

On the macro front, the Fed is not expected to make any changes to interest rates later, but the view is taking root among investors that the central bank may not cut rates at all this year, delivering a blow to interest rate-sensitive assets such as cryptocurrencies, emerging market stocks and bonds or even commodities.

Investors have responded accordingly. The 10 largest US spot bitcoin ETFs are facing their biggest weekly outflow since their inception in January.

Outflows are up to $496 million this week, mostly as flows into BlackRock's iShares Bitcoin Trust, the largest in terms of holdings, have slowed, according to LSEG data.

Bitcoin's so-called "halving event" last month has done little to prop up the price. Since April 20, when halving took place, bitcoin has dropped some 15%. Many investors bought into the market in the run-up to the event, which involves a change to the cryptocurrency's underlying technology that happened and is designed to cut the rate at which new bitcoins are created.