Bitcoin Value Drops After U.S. Federal Reserve's Stable Rate Decision
Summary:
Bitcoin's value experienced a dip following the U.S. Federal Reserve's decision to keep interest rates stable, challenging any optimism for a potential rate cut in March. The value decline comes despite robust economic growth and a vigilant stance against inflation. Rate cuts, being favorable for cryptocurrencies, their absence affects Bitcoin's market, and it is trading lower. A resumption of Bitcoin's overall upward trend is however expected following an anticipated short-term surge.
The price of Bitcoin (BTC) took a nosedive on Wednesday, following the U.S. Federal Reserve's decision to keep interest rates stable, dampening expectations for a prospective rate reduction in March. The Federal Open Markets Committee's press briefing on January 31st stated that the U.S interest rates would maintain a level of 5.25%-5.50%, and further clarified that definitive assurance that inflation pressures have been addressed would be necessary before any rate cuts. Subsequent to the FOMC's announcement, Bitcoin's value diminished slightly more than 2.2% and presently stands at $42,590, although it has increased by 7% over the past week as indicated by TradingView data. Bitcoin's price experienced a 2.2% decrease after FOMC decided to hold the rates steady. Source: TradingView
The Federal Reserve Board in a statement said, "Until there is more substantial evidence that inflation is reliably moving towards 2 percent, the committee doesn't anticipate it will be necessary to lower the target range."
The Board also stressed that present indicators suggest a sturdy economic growth, displaying continuous job growth and a decrease in the unemployment rate as proof of robustness. Though, they emphasized their hawkish stance by stating that, despite inflation easing over the past year, it continues to be at a level where rate cuts are anything but definite.
They commented, "The future of the economy is uncertain, and the committee remains extremely vigilant against the risks of inflation." Rate reductions are typically viewed as bullish for risk-prone assets like cryptocurrencies and tech stocks.
When the Federal Reserve lowers rates, the cost of borrowing decreases, enhancing spending activity and bold economic behavior eventually. Related: Bitcoin could potentially drop to $30,000, but that wouldn't be alarming.
IG Markets analyst Tony Sycamore, in an email to Cointelegraph, stated Bitcoin's lower trading value signifies "a downgrade in risk sentiment" resulting from the Federal Reserve's hawkish stance. Sycamore suggested that investors might anticipate a surge towards $45,000 before revisiting the mid-$30,000 range. Subsequently, he forecasts a resumption of Bitcoin's overall upward trend. Big Questions: What steps can Bitcoin payments take for a recovery?
Published At
2/1/2024 3:00:06 AM
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