Volatile bitcoin falls from record high as crypto frenzy hits pause

Bitcoin experienced a sharp decline from its record high as the cryptocurrency frenzy took a pause. The volatile nature of bitcoin was evident as investors sought to take profits from its surge while an unexpected increase in U.S. inflation dampened demand for riskier assets and hindered the possibility of early rate cuts. Bitcoin dropped over 5% during the Asian session, hitting a one-week low at $66,629.96, before partially recovering to trade 3.5% lower. This significant fluctuation in the world’s largest cryptocurrency occurred one day after it reached a new high of $73,803.25 for the fourth consecutive day. Market analysts highlighted bitcoin’s tendency to become volatile after hitting record highs and expressed concerns over the less dovish stance of the Federal Reserve. Recent data releases, including modest U.S. retail sales rebound and higher-than-expected producer prices, indicated persistent inflationary pressures and led to a reduction in the odds of an easing cycle by the Fed in June. A scenario of higher interest rates, particularly in the U.S., typically affects risk-sensitive assets like cryptocurrencies negatively. Nonetheless, bitcoin’s year-to-date performance remained strong with a nearly 60% increase, driven by the ongoing crypto frenzy and anticipation of lower global interest rates by year-end. In a bullish move, software firm MicroStrategy announced plans for a convertible bond offering to purchase bitcoin for the second time in under 10 days, contributing to the volatile trading of bitcoin on that Friday. Experts emphasized the absence of regulations in the crypto market, allowing significant trades by influential individuals or entities to trigger rapid price fluctuations and heightened volatility. The second-largest cryptocurrency, Ether, also experienced a similar decline, reaching a one-week low and falling over 4% to $3,670.