Strength in the dollar pressured crypto markets in recent sessions, especially as strong U.S. inflation and retail sales data gave the Federal Reserve little impetus to begin cutting interest rates. This notion was also reiterated by Chair Jerome Powell on Tuesday.
Weak risk appetite, amid persistent geopolitical tensions in the Middle East, also kept traders largely on the sidelines, while safe haven demand and rate expectations put the dollar at over five-month highs.
Bitcoin rose 2.9% in the past 24 hours to $64,269.5 by 01:15 ET (05:15 GMT). The token remained in a trough between $60,000 and $70,000 for a month after hitting a record high above $73,000 in March.
Focus was now on the upcoming halving event, which is expected to take place in the coming days with the generation of block no. 840,000 on the Bitcoin blockchain.
The event will halve the rate at which new Bitcoin is mined, and is expected to further the narrative that the scarcity of the token will increase its value.
Traders expect the halving to spur some gains in Bitcoin, although past halvings have usually resulted in limited near-term gains.
Fed Chair Jerome Powell said on Tuesday that sticky inflation gave the Fed little confidence to begin cutting interest rates.
His comments saw traders further scale back expectations for an interest rate cut in June. Markets now see a less than 18% chance for a 25 basis point cut in June, and a nearly 80% chance that the Fed will keep rates steady, according to the CME Fedwatch tool. The bets mark a stark reversal from earlier expectations for a June cut.
Higher-for-longer rates bode poorly for crypto markets, given that the sector usually thrives in a low-rate, high-liquidity environment.
Broader cryptocurrency prices rose on Wednesday, with world no.2 token Ethereum up 2.8% at $3,110.40.
Solana added 7%, while XRP traded sideways.
But all three tokens were nursing recent losses, especially in the face of higher-for-longer U.S. interest rates.
Risk appetite was also fragile amid persistent fears of worsening geopolitical tensions between Iran and Israel.
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