A day after recording an 8% gain in response to President Biden's executive order, Bitcoin (BTC) retreated sharply today. Like the rest of the cryptocurrency market, Bitcoin is under pressure, down more than 5% to fall below $40,000. As of press time, Bitcoin is currently trading at $39,324 with a market cap of $745 billion.

Bitcoin plunges after taking profits

Bitcoin reversed direction while the euro's two-day rally halted as investors awaited the European Central Bank's (ECB) reaction to the storm of high inflation and low growth.

According to TradingView, the highest price in the Asian session fell to $39,000, nearly reversing the 8 percent gain caused by President Joe Biden's cryptocurrency executive order on Wednesday.

Laurent Kssis, a cryptocurrency exchange-traded fund specialist and director at CEC Capital, said.

“During Asian trading, the market fell again at around 1:30 UTC as a prolonged liquidation washout still dominated the leveraged market. Any possibility of a pullback seems futile due to the selling pressure caused by these liquidations.”

Despite the cryptocurrency executive order boosting the cryptocurrency market, concerns about rising inflation remain. The entire focus will be centered on the upcoming U.S. inflation, which is expected to rise due to the current geopolitical situation.

Historically, the Federal Reserve (Fed) has had the most influence on the cryptocurrency market, while the European Central Bank's interest rate decisions have had little to no impact. According to one observer, Thursday's statement is crucial.

Griffin Ardern, volatility trader at Blofin, a cryptocurrency asset management firm, noted that

“At this point, we already know the Fed is going to rise, so this is going to happen regardless of how the U.S. market changes. Probably the biggest influence at this point is the hawkishness of the ECB this week.”

The ECB is expected to announce its monetary policy decision at 12:45 GMT on Thursday, March 10. ECB President Christine Lagarde will hold a press conference at 13:30 GMT, 45 minutes after the ECB's policy announcement.

"Any unexpected move by the ECB could trigger a market decline," Ardern added.

BTC/USD is trading at $39,000. Source: TradingView

U.S. consumer prices rose 7.9% last month, the largest increase in more than 30 years. The growing inflation numbers have put tremendous pressure on risky assets like bitcoin and stocks. As a result, Bitcoin has experienced tremendous volatility in recent months.

Bitcoin has risen above $40,000 twice in the last month, but has failed to sustain that level for long. Volatility is likely to persist given that the U.S. Federal Reserve can raise interest rates faster than expected in the event of a spike in inflation data.

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