Bitcoin's price has fallen below the $70,000 mark after the U.S. Federal Reserve announced it would maintain interest rates and hinted that there would be no rate cuts in the short term. This decision has pushed back market expectations for rate cuts until mid-2026, further solidifying a macro environment of "high rates lasting longer." Bitcoin quickly plummeted from $72,400 to below $70,000 within hours, erasing all gains made earlier this week.
This approximately 3% drop has had widespread repercussions across the entire cryptocurrency market. On-chain data indicates that the primary driver behind Bitcoin's decline was not selling in the spot market, but rather significant volatility in the derivatives market.
Macroeconomic Factors Dominate Bitcoin's Decline, Fed's Rate Decision Impact Evident
The Fed's decision to keep rates unchanged immediately had a significant impact on risk markets. The ongoing monetary policy of "high rates lasting longer" is putting pressure on speculative assets and may continue until 2026. Bitcoin and the broader cryptocurrency market reacted sharply to this announcement, with short-term traders who had anticipated a more accommodative monetary policy feeling the consequences almost immediately.
As analysts have pointed out, high interest rates in the current financial system increase borrowing costs, prompting investors to reallocate capital to safer asset classes like government bonds and cash. Bitcoin, as a high-risk asset, often faces sustained outflows of capital in such an environment, a pattern that has been repeated during recent monetary tightening cycles.
Before this Fed meeting, the market widely expected rate cuts to arrive around mid-2026, but the Fed's latest decision has pushed that timeline further back, catching many traders off guard. Notably, during the rate hike cycle in 2022, Bitcoin fell below $30,000 under similar macro conditions, while it rebounded above $70,000 when rate cut expectations began to rise at the end of 2023.
The next Fed meeting is scheduled for May 6-7. The upcoming Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) data will be key in influencing rate cut expectations. Additionally, geopolitical developments involving Iran add uncertainty to future trends. The macroeconomic landscape remains a crucial factor affecting the direction of the cryptocurrency market.
Derivatives Market Dominates Bitcoin Sell-Off, Short Positions Surge
On-chain analysts have noted that during the decline in Bitcoin's price, the trading volume in the derivatives market was about 12 times that of the spot market, clearly indicating the source of the sell-off pressure. This disparity between the spot and perpetual futures markets reveals the primary battleground for selling pressure.
Data shows that the spot capital inflow/outflow (CVD) indicator was -40.64 million and continued to trend downward during the decline. Meanwhile, the CVD for perpetual futures sharply dropped to -506.75 million, further confirming the sell-off pressure driven by derivatives. This indicates that spot market participants were not the main drivers of this price drop, with the entire sell-off process being dominated by the derivatives market.
Subsequently, the funding rate turned negative (-0.0024%), meaning that holders of short positions need to pay fees to long position holders to maintain their positions. This shift confirms that the market has overall turned to a net short position in a very short time. Such a crowded short position scenario increases the risk of forced liquidations.