Before the Fed announces the interest rate decision and the release of key inflation data in the United States, the global market is on edge, and bitcoin investors have reason to be wary of potential increased volatility. Data shows that the 30-day correlation between bitcoin and the 10-year US Treasury bond yield is -53, one of the most negative readings on record since 2010, indicating an unusually high degree of negative correlation between bitcoin and benchmark bond yields.

The May CPI data for the United States will be released at 20:30 Beijing time on Wednesday. The Federal Reserve will announce its interest rate decision at 02:00 Beijing time on Thursday and update its rate forecasts. The market currently expects the year-on-year increase in May CPI in the United States to remain unchanged at 3.4%; and the year-on-year increase in core CPI is expected to be 3.5%, slightly lower than the previous value of 3.6%. At the same time, according to a survey's median estimate, 41% of economists expect the Federal Reserve to send signals of two rate cuts in the highly anticipated dot plot, while an equal number of economists expect the Fed's forecast to display only one rate cut or no rate cuts at all. The bond market may be impacted by inflation data and the outlook for the Federal Reserve's interest rates. Relevant studies suggest that bitcoin may face the risk of sell-offs.

The bond market may be impacted by inflation data and the outlook for the Federal Reserve's interest rates. Relevant studies suggest that bitcoin may face the risk of sell-offs.

Bitcoin prices fluctuated on Tuesday, falling by 3.2% to a one-week low. Driven by the influx of funds triggered by the approval of the spot bitcoin ETF, bitcoin reached a record high of $73,798 in mid-March. However, in the past three months, bitcoin prices have been struggling to set new highs. IG Australia Pty market analyst Tony Sycamore said that bitcoin's recent failure to break historical highs "sounded an alarm bell."

Tony Sycamore said: "The lack of progress in recent weeks is worrying, as a large amount of money has flowed into the bitcoin ETF, but so far it has failed to turn things around." "The next 36 hours are critical."

Data shows that the spot bitcoin ETF has attracted a net inflow of $15.6 billion since its approval in January. On Monday, the spot bitcoin ETF saw a net outflow of $65 million, ending 19 consecutive days of record net inflows.

Since the beginning of 2023, bitcoin has rebounded from a deep bear market and has risen by more than four times. Nevertheless, for speculative assets like bitcoin, the prospect of rising borrowing costs and interest rates remaining high for a longer period is a challenging backdrop.

Technical analyst Katie Stockton of Fairlead Strategies LLC said in a report that based on chart patterns, the short-term momentum of bitcoin is "neutral", but the long-term outlook is more positive. Anand Gomes, co-founder of the derivative platform Paradigm, said that the crypto market is like an addict that constantly needs bullish news to support it, and when there is no good news, the "path of least resistance" is to go down.

Edited by Jeffrey