The flagship cryptocurrency fell more than 4% in the past 24 hours to $66,495.8 by 04:49 ET (08:49 GMT). The downswing pushed Bitcoin price below the previous week’s stable range of $68,000 to $72,000.
The dollar index, a measure of the U.S. dollar’s strength against a basket of major currencies, crossed the 105 mark for the first time since mid-November, driven by an unexpected uptick in ISM manufacturing PMI figures for March.
The report showed the first increase in factory activity since September 2022, rising 2.5 points to 50.3 from February’s 47.8.
This development, marking an end to 16 months of contraction, challenges the likelihood of imminent Federal Reserve rate cuts.
Key components such as new orders also returned to growth, and the prices index saw a significant increase to 55.8% from 52.5%.
Following this report, market expectations for Fed rate cuts have adjusted, with swap contracts now forecasting less than 65 basis points in reductions for the year, down from previous expectations, according to Bloomberg. Put simply, it reduces the odds of a Fed rate cut in June to below 50%.
A stronger dollar typically makes assets priced in dollars, such as Bitcoin and gold, more expensive and less attractive, potentially reducing demand. Moreover, a continuously strong dollar can lead to global financial tightening, reducing investors’ appetite for risk assets.
“This (dollar) strength is an extension of the move seen late last week when the Federal Reserve’s Christopher Waller delivered a less dovish speech,” said Chris Turner, head of global markets at ING.
The notable drop in Bitcoin price extended into crypto altcoins as well, with the likes of Ethereum, Solana, and Doge seeing even sharper declines.
Specifically, ether and Cardano’s ADA each slid more than 5% over the past 24 hours, while Solana’s SOL and Dogecoin tumbled over 7.8% and 10%, respectively.
The broader crypto market faced significant liquidations, with over $400 million in long positions being liquidated, compared to $85 million in short positions. The total crypto market cap fell around 5.3% during the same period to $2.62 trillion, according to Coingecko data.
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