BTC Price Index and Live Chart – CoinDesk”>(BTC) dipping to near $66,000 as traders brace for Wednesday’s key U.S. inflation report and Federal Reserve meeting.

BTC Price Index and Live Chart – CoinDesk”>(BTC) started the day trading near $70,000 before hitting a three-week low price at $66,170 during the U.S. session. It recovered slightly to $66,500 but still fell nearly 5% in the last 24 hours.

Altcoins experienced even greater pullbacks in the same time period. The CoinDesk 20 Index, a benchmark for the crypto-market, fell over 6% and all 20 constituents were in the red. Ethereum’s ether fell below $3,500, and by 6.5%. Solana (SOL), Dogecoin (DOGE), Cardano ADA, and Chainlink LINK also suffered losses of 6% to 9%.

CoinGlass shows that the sudden pullback resulted in over $250 million of liquidations for leveraged derivatives positions in all crypto assets. This is the second major leverage flush this week, following Friday’s liquidation of $400 million.

When an exchange liquidates a leveraged trade, it is because of a partial loss or a total loss of money put down by the trader (or “margin”) or the fact that the user has not met the margin requirements.

Cryptoliquidations (CoinGlass)

In an update, QCP hedge fund said that investors are “de-risking”, or removing themselves from crypto assets in anticipation of the May Consumer Price Index report (CPI) and Fed meeting tomorrow.

In a market update on Tuesday, K33 Research said that Bitcoin’s session could be volatile Wednesday because it has recently been “highly reactive” to recent economic data and its 30-day relationship with U.S. stocks is at the highest level since 2022.

The market is poised for a macro-Wednesday that will be frantic, as both the May CPI and the FED’s interest rate announcement are expected to have a significant impact on the market.

Investors will be watching the Federal Open Market Committee’s (FOMC) members interest rate outlook, or “dot plot”, to see how many cuts they are expecting this year in view of recent inflation data and soft economic data.

The FOMC dot chart, along with forward guidance given during Jerome Powell’s press conference is likely to have the biggest impact on price, since BTC has re-adjusted its attention to the market’s expectations of interest rates.

During the recent sell-off, market observers noticed some positive signs that could indicate a rapid recovery.

Crypto analyst Gumshoe, who goes by the pseudonym Gumshoe, noted in a post that Bitcoin experienced multiple pullbacks before FOMC meetings this year only to reverse its move shortly after.

Crypto analytics platform CryptoQuant cited pseudonymous trader BQYoutube to report that Bitcoin futures interest had diverged on BitMEX and Binance earlier today. This is a common phenomenon when whales [on] BitMEX begin to accumulate positions, while Binance retail washes out,” said the article.

QCP stated that despite short-term headwinds this could be an opportunity to accumulate coins.

Kevin Reynolds is the editor.