Bitcoin prices dropped below $69,000 following recent comments from Beth Hammack, president of the Federal Reserve Bank of Cleveland. Hammack indicated that federal policymakers might soon need to act if inflation continues to rise. She expressed greater concern about the risks of ongoing elevated inflation compared to the risks of full employment. While she acknowledged the strength of the U.S. economy, characterized by a stable labor market, she noted that inflation exceeds the Fed's 2% target and appears to be rising across various sectors.
Hammack suggested that while maintaining interest rates might be appropriate in the near term, current monetary policy may not be stringent enough to control inflation. She cautioned that failing to act promptly could lead to steeper adjustments and greater economic costs later.
As the Federal Open Market Committee (FOMC) approaches its June meeting, markets widely expect rates to remain between 3.5% and 3.75%. Concurrently, Bitcoin's two-month rally that peaked at $82,850 faced pressure from market uncertainties. This decline was fueled by significant outflows from U.S. spot Bitcoin ETFs, which reported $484 million in withdrawals over a recent 11-day streak. Additionally, a minor sale by the investment firm Strategy and a substantial transfer of Bitcoin by a wallet linked to BlackRock diminished short-term market confidence.
Further adding to the market's bearish sentiment, the Mt. Gox exchange moved over 10,000 BTC for the first time in two months, raising renewed speculation regarding creditor repayments. These developments underscore the current volatility in the cryptocurrency market, driven by macroeconomic factors and internal market movements.