Crypto market experts have flagged the increasing strength of the US Dollar as a limiting factor in digital assets in the wake of plunging sentiments. A new report from QCP Markets shows the impact of crypto prices as the dollar gains momentum.
“The US Dollar is inching higher again, placing a cap on risk assets including crypto. The Swedish Riksbank cut interest rates from 4.00% to 3.75%. This follows the Swiss National Bank (SNB) which cut earlier in March and the ECB is also expected to cut in June.”
According to the report, inflation and macroeconomic factors may make other Central Banks wait for the Federal Reserve to cut rates before a follow-up. Another reason posted was the divergence between the US and other countries.
Macroeconomic Factors To Affect Crypto Prices
Per the report, certain factors will affect an uphill market run as crypto prices drop in recent weeks. Institutional investors and big banks continue to speculate two rate cuts this year with the first coming as early September. At the moment, the Federal Reserve continues to leave interest rates unchanged citing the need to put inflation in check.
Rate cuts could heighten crypto prices as investors will pour funds into risky assets. Last year’s interest rate hikes saw investors move funds out of risky assets impacting market sentiments.
At press time, BTC trades at $61,253, a 2% decline in the last 24 hours. This plunge is seen in wider crypto prices as Ethereum, Solana, Ripple, and Dogecoin all post low prices.
Low ETF Momentum
Analysts at QCP also pointed to reduced inflows in spot Bitcoin ETFs. The market saw increased flows last Friday but recent events have triggered a pullback from investors. The firm tips topside strategies to provide risk-reward for users.
Bitcoin ETFs dominated industry narratives in Q1 with the asset price soaring to a new all-time high.
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