Bitcoin (BTC) declined below a crucial support level on Thursday, dragging down the cryptocurrency market as the U.S. dollar strengthened before Federal Reserve Chair Jerome Powell's address.
The top cryptocurrency decreased over 1% to $121,500, reversing Wednesday's gains and breaking through the 200-hour simple moving average, according to CoinDesk data. Other major cryptocurrencies including BNB and ETH fell more than 3%. The CoinDesk 20 Index dropped 1% to 4,155 points.
This market downturn occurred despite another day of substantial inflows into U.S.-listed spot Bitcoin ETFs, which collectively attracted $426 million on Wednesday, extending the pattern of strong daily inflows witnessed throughout the past week, per SoSoValue data.
The dollar index, measuring the U.S. currency against major fiat currencies, climbed to 99.10, reaching its highest level since August 1, reducing the attractiveness of dollar-denominated assets such as bitcoin and gold. Gold briefly declined to $4,000 per ounce before recovering above $4,030.
Federal Reserve Chair Powell is scheduled to speak at the Community Bank Conference in Washington at 12:30 GMT. Market participants will monitor his comments for monetary policy indications, particularly given the U.S. government shutdown that has suspended key economic data releases including inflation and employment figures that the Fed typically considers when determining interest rates.
Wednesday's release of Federal Reserve September meeting minutes highlighted concerns about the shutdown's impact. Committee members noted that without resolution before the October 28-29 FOMC meeting, policymakers would lack crucial economic metrics for decision-making.
Meeting Minutes Reveal Inflation Concerns
The minutes indicated that while policymakers agreed on the need for rate reductions, they differed on the appropriate pace and expressed worries about persistent inflation.
"Most judged that it likely would be appropriate to ease policy further over the remainder of this year," stated the Federal Open Market Committee's September 16-17 meeting minutes. "A majority of participants emphasized upside risks to their outlooks for inflation."
Officials voted 11-1 to lower the federal funds rate by 25 basis points, establishing a target range around 4%. Meanwhile, most of the 19 officials projected at least two additional rate cuts this year, while seven anticipated no further reductions. Last month's dot plot showed a narrow majority favoring two more rate decreases that would bring the benchmark rate to 3.50-3.75%.
Discussions centered on a softening labor market and emerging signs that inflation might accelerate again. However, the committee generally concurred that President Donald Trump's trade tariffs wouldn't create lasting inflationary pressure.