Bitcoin experienced its lowest point in more than two months as May began, coinciding with the Federal Reserve’s decision to maintain interest rates at their current level.
The cryptocurrency experienced a 5% drop to $56,526.00, marking its lowest point since February 27, according to CoinMetrics. It then saw a further decline of about 4% to $56,954.13.
Investor attention has been drawn to the latest interest rate decision from the Federal Reserve, following the conclusion of its two-day policy meeting on Wednesday. As expected, the central bank opted to maintain its benchmark short-term borrowing rate unchanged. Since July 2023, the federal funds rate has remained within a targeted range between 5.25% and 5.50%.
Geoff Kendrick, the head of digital asset research at Standard Chartered, noted in a Wednesday statement that the broader macroeconomic landscape has become less favorable for assets such as cryptocurrencies, which typically thrive on liquidity. He highlighted a rapid deterioration in broader liquidity indicators in the United States since mid-April.
Bitcoin briefly surged to $60,989.58 before reversing its gains.
Zach Pandl, head of research at Grayscale Investments, suggested that higher real interest rates likely bolstered the dollar and weighed on bitcoin in the past month. He noted that while the Federal Open Market Committee (FOMC) expressed concerns about inflation, it did not rule out rate cuts. Expectations of potential future rate cuts could provide support for bitcoin’s price and the broader crypto markets.
Bitcoin has been trading within a narrow range lately, with significant catalysts like U.S. exchange-traded funds and the halving event now in the past. Its retreat from the all-time highs seen in March intensified this week amid a broader risk-off sentiment. Bitcoin has experienced a decline of over 10% for the week, marking its worst performance since November 2022.
Additionally, Kendrick highlighted five consecutive days of outflows from U.S. bitcoin ETFs and a lackluster response to the launch of spot bitcoin ETFs in Hong Kong. The cryptocurrency’s decline coincided with the sentencing of former Binance CEO Changpeng Zhao to four months in prison on money laundering charges.
Although bitcoin investors anticipate a robust recovery later in the year, they acknowledge that the price could continue to fluctuate over the next few weeks due to macroeconomic and geopolitical pressures.
Analysts at Bitfinex foresee a potential 1-2 month consolidation period for bitcoin prices, with the cryptocurrency trading within a range and experiencing swings of up to $10,000 on either side. They anticipate that the positive effects of the halving, which has reduced bitcoin’s supply, will become more apparent in the coming months.
Read More: Changpeng Zhao, CEO of Binance, receives a four-month prison sentence
Disclaimer:
This content is AI-generated using IFTTT AI Content Creator. While we strive for accuracy, it’s a tool for rapid updates. We’re committed to filtering information, not reproducing or endorsing misinformation. – Jomotoday for more information visit privacy policy
Leave a Comment