Bitcoin (BTC-USD) is poised for its first monthly decline since the collapse of the FTX cryptocurrency exchange in November 2022.
The world's largest digital asset by market cap has dipped 2.4% in the past 24 hours to $27,158, hovering just above its 200 week simple moving average. Ethereum (ETH-USD) stood at £1,806, down 1.9% in the past 24 hours.
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Bitcoin dropped approximately 8% in May, its first monthly retreat of 2023.
The leading cryptocurrency had surged by 84% from the beginning of January to mid-April, where it peaked briefly at $31,000.
However, bitcoin's 2023 rise has now begun to reverse, with factors such as diminishing liquidity and a tightening of monetary policy, tempering the excitement amongst both retail and institutional investors for cryptocurrencies.
The digital asset's price had risen throughout March and April on the back of increased skepticism towards mainstream financial systems, after the downfall of US regional banks, such as Silicon Valley Bank and Signature Bank.
However, this catalyst was short-lived as US authorities quickly stepped in to stabilise the financial sector.
Also, a Federal Reserve official in the US this week announced that there is no compelling case to halt the Fed's monetary tightening, causing risk assets such as bitcoin to become less attractive to investors.
Speaking to the Financial Times, Federal Reserve Bank of Cleveland President Loretta Mester said: "I don't really see a compelling reason to pause rate hikes.
"I would see more of a compelling case for bringing the rates up and then holding for a while until you get less uncertain about where the economy is going."
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