The recent sharp decline in Bitcoin (BTC) prices has caught the attention of global investors, who often view the digital asset's movements as a harbinger of what's to come for the broader financial markets. As of the latest update, BTC is trading 4.5% lower at $57,453, with a market capitalization of $1.13 trillion.

The Bitcoin price has extended its losses in the double-digits on the weekly chart, with investors anticipating further downside, potentially reaching as low as $50,000. This comes after a 16% price drop in April, marking the cryptocurrency's worst month since the FTX collapse in November 2022.

Investors closely monitor Bitcoin's performance to gauge shifts in liquidity dynamics that can impact other assets. The recent decline in Bitcoin prices has been attributed to signals from the Federal Reserve, indicating that interest rates will remain elevated for an extended period. This stance has tightened financial conditions by driving up Treasury yields and the value of the US dollar.

In its latest decision, the FOMC opted to maintain US interest rates at their current range of 5.25% to 5.50%, a level unchanged since July 2023. Many in the crypto community had hoped for a rate cut from the US Fed on May 1st, which could have boosted equity market valuations and, consequently, cryptocurrencies. However, Jerome Powell has indicated that the Fed intends to keep rates steady until inflation retreats to the 2% target level.

The demand for Bitcoin and Ether exchange-traded funds (ETFs) in the US market has also been largely bearish, with massive $560 million outflows from spot Bitcoin ETFs on Wednesday. The launch of spot Bitcoin and Ether ETFs in Hong Kong did not provide the expected boost, and discounts to the net asset value for certain US portfolios have expanded to unprecedented levels.

Looking ahead, experts suggest that the next three to four months may be less bullish and more risk-oriented, with the market closely monitoring inflation, employment, and economic data for any unexpected shocks or potential rate cuts.