Bitcoin subdued, hovers under $74k as rise in Fed rate hike expectations weigh

Bitcoin experienced a subdued trading session on Wednesday, as rising expectations of further interest rate hikes by the U.S. Federal Reserve weighed on the cryptocurrency. The dip in Bitcoin's value was compounded by a broader decline in the cryptocurrency markets, fueled by uncertainty surrounding U.S. regulatory policy following the Democrats' victory in the midterm elections.

Bitcoin's price fell 0.2% to $73,658.5 by 18:20 ET (23:20 GMT), marking a three-month low during overnight trading. The performance of Bitcoin was impacted by factors such as a stronger dollar, rising yields, and capital outflows from exchange-traded funds.

Inflation data for October revealed hotter-than-expected inflation figures and was accompanied by comments from two Federal Reserve officials advocating for higher interest rates to curb inflation. This led to a nearly 89% chance of a 25 basis point rate hike in December, as per CME Fedwatch. The market's perception of a higher rate environment is generally unfavorable for speculative assets like crypto, as it raises the opportunity cost of investing in such sectors over debt. Bitcoin has historically underperformed during periods of high-interest rates.

The rising prospect of higher rates cast a shadow over Bitcoin's performance, exacerbating the losses it had already incurred earlier in the week following the Democrats' sweep in both chambers of Congress. The Democrats have a history of pushing for stricter anti-money laundering and risk management practices in the crypto industry. Other major cryptocurrencies like Ether, XRP, Solana, Cardano, and BNB also saw declines, while memecoins such as Dogecoin and $TRUMP experienced further losses.