Bitcoin fell 4% as the Federal Reserve paused interest rates.
Following a hawkish Fed statement and another rocky week for the cryptocurrency market, the price of Bitcoin has dropped below the $25,000 threshold for the first time since March 17.
Data from TradingView shows that the price of Bitcoin dropped 4% from $25,867 to $24,819 in just thirty minutes on June 15. When this article was written, Bitcoin had gained some ground and was holding steady slightly above $25,000.
Bitcoin has been holding steady at approximately $26,000 over the past week as the market adjusted to the SEC’s legal action against prominent cryptocurrency exchanges Coinbase and Binance as well as growing macroeconomic uncertainties surrounding interest rate signals from the US Federal Reserve.
The sharp price decline occurred approximately three hours after the Federal Reserve announced a halt to interest rate increases, following a fifteen-month campaign of rate increases to combat surging inflation.
Although the Federal Open Markets Committee’s statement hinted at potential future rate increases, the market was nearly universally anticipating a rate pause. This often dampens investor enthusiasm for risky assets like cryptocurrencies.
Josh Gilbert, an analyst with eToro, claims that Jerome Powell, the head of the Federal Reserve, has made it very obvious that this is simply a temporary halt, which might cause further problems for Bitcoin in the long run.
“Much of the optimism surrounding risk assets this year, including Bitcoin, is predicated on the belief that inflation will decline and interest rates will peak before beginning to decline,” Gilbert said.
Although inflation is moving in the right direction, Jerome Powell’s comments indicate that rates may increase further, which would be unfavourable to Bitcoin.
Ether, the second-largest cryptocurrency by market size, also suffered losses, sliding more than 5% from $1,727 to $1,631 during the same time period. The gloomy sentiment also affected altcoins, with several of the tokens classified as securities in the SEC’s litigation falling by more than 3%.
Cardano ADA is currently down 3.4% over the past day, while Polygon MATIC and Solana SOL also had declines of 3.3% and 2.8%.