- Bitcoin and other cryptocurrencies experienced a decline on Thursday in line with the weakness in risk-sensitive assets following the Federal Reserve’s recent monetary policy decision.
- Cryptocurrencies reacted to the Fed’s latest move much like the stock market, including the Dow Jones Industrial Average and the S&P 500, but the decision to halt interest rate hikes was largely expected.
- Apart from Bitcoin, the second-largest cryptocurrency, Ethereum, dropped by 1.5% to $1,610. Smaller tokens or alternative cryptocurrencies also performed poorly.
Bitcoin and cryptocurrencies fell today after the FED decided to keep interest rates constant: Will the horizontal trend continue?
Bitcoin’s Price Not Affected by the Fed’s Interest Rate Decision
Bitcoin and other cryptocurrencies experienced a decline on Thursday in line with the weakness in risk-sensitive assets following the Federal Reserve’s recent monetary policy decision. Cryptocurrencies are preparing to return to a range-bound trading period that has defined the past few months.
Bitcoin’s price fell by about 1% in the last 24 hours, reaching approximately $26,730, and retreated from its peak of around $27,300 on Wednesday, likely signaling an expectation of further increases following the Fed’s indication that rates will likely be raised again.
The largest digital asset has thus returned to the range around $26,000, which has defined a period of stagnant activity for over a month. Historically low volatility and trading volume are contributing to the stagnation in the crypto markets.
Markus Levin, co-founder of the blockchain network XYO, stated, “I expect more sideways movement for Bitcoin and the rest of the market,” adding, “We will likely continue to see gradual accumulation, with dips being bought and rallies being short-lived.”
Cryptocurrencies, like the stock market, reacted to the Fed’s latest move, but the decision to halt interest rate hikes was largely expected. The outlook for interest rates will continue to affect Bitcoin (higher yields on risk-free assets like cash or Treasury bonds provide less incentive for investors to take on riskier bets like cryptocurrencies), but the Fed’s next monetary policy decision won’t come until November.
During this time, investors should be prepared for more of the dull Bitcoin movements that have characterized the crypto market since the beginning of the summer.
Expectations Are Not Positive for Now
Levin continued, “I don’t think major rallies are in store for the overall digital asset market until a new catalyst comes along. Such a catalyst could be one or more factors, including the approval of one of the proposed spot Bitcoin ETFs or crypto exchange-traded funds considered by the SEC in the lower ranks or next year’s Bitcoin halving.”
Levin referred to crypto exchange-traded funds and the halving event, which would change Bitcoin’s supply dynamics, affecting supply and demand dynamics.
