- Bitcoin (BTC) price experienced a rapid decline to the lowest level seen since June 21, reaching $29,000, due to intense selling pressure today.
- Since March 2022, the Fed has been implementing the fastest interest rate increase policies and has raised the benchmark borrowing rate from zero to a range of 5% to 5.25%.
- Now, the market is awaiting the policy interest rate meeting, and CME FedWatch indicates a 99.8% probability that the Fed will announce a 25 basis point interest rate hike at this week’s meeting.
As the Fed’s interest rate decision, which will be announced on July 26, approaches, the price of Bitcoin experienced a rapid decline to $29,000 along with today’s selling wave.
Bitcoin Price at the Lowest Level in the Past Month
Bitcoin (BTC) price experienced a rapid decline to $29,000, the lowest level seen since June 21, due to intense selling pressure today. This decline occurred in an environment of uncertainty ahead of this week’s U.S. Federal Reserve policy interest rate decision.
Since March 2022, the Fed has been implementing the fastest interest rate increase policies and has raised the benchmark borrowing rate from zero to a range of 5% to 5.25%. Interest rate hikes are one of the key tools used by central banks to slow down inflation by increasing borrowing costs. This can also slow down the rise of stocks and recently cryptocurrencies.
In June, annual inflation decreased from 9.1% compared to a year ago to 3%, strengthening market hopes that the Fed would ease its tight stance. Last month, there was a pause in the interest rate hike at the central bank meeting.
In June, the Fed stated that it may need two more interest rate hikes this year to combat inflation. However, now the market is awaiting the policy interest rate meeting, and CME FedWatch indicates a 99.8% probability that the Fed will announce a 25 basis point interest rate hike at this week’s meeting.
Expectation of Interest Rate Hike Strengthens the Dollar
The expectation of an interest rate hike also strengthened the dollar, and the dollar index (DXY), which measures the value of the dollar against major reserve currencies, gained 1.31% by surpassing 100 points last week. The Nasdaq index also fell below 15,500 points with a 0.84% decline last week. The futures market opened with a slight increase of 0.19% this morning, and the index is trading around 15,475 points.
If the Fed strengthens its tight stance by announcing a longer-lasting interest rate hike regime or multiple interest rate hikes for the rest of the year, markets could see a significant selling wave due to fears of a possible recession. If the Fed’s language indicates that this rate hike will be the last for this cycle, markets can receive a green signal to move upward.
Current data shows that Bitcoin’s trading volume significantly decreased ahead of the Fed’s meeting, and it has shown daily volumes below $10 billion for three consecutive days since last Friday.
