Bitcoin retreated to some extent but remained in a range on Monday, after a volatile end to last week. Traders could remain cautious as they position for a busy schedule over the coming days.
Monetary policy remains the main driver. The European Central Bank is expected to raise interest rates this week, ahead of US inflation data that could shape expectations for the Federal Reserve.
Markets currently price in an interest rate increase at next week’s Fed meeting. This backdrop could keep global bond yields elevated, weighing on risk assets. Softer inflation data could ease pressure on yields and support cryptocurrencies, while an upside surprise would likely reinforce tightening expectations and create further headwinds for Bitcoin.
Geopolitical developments are adding another layer of uncertainty. Persistent tensions in the Middle East have kept oil prices elevated, fuelling inflation concerns and reinforcing the case for tighter monetary policy. A prolonged period of instability could also strengthen safe-haven demand for the US dollar, pulling investments away from assets like Bitcoin.
Institutional demand, however, continues to provide some support. Spot Bitcoin ETFs attracted USD 986 million last week, marking a third consecutive week of net inflows. Regulation could provide another catalyst. The Senate is scheduled to vote on the CLARITY Act a day before the Federal Reserve decision. Approval could strengthen institutional demand, while another delay could place selling pressure on Bitcoin.
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