The price of Bitcoin plunged 4% as the Federal Reserve pressed pause on interest rates.
The price of Bitcoin has fallen below the $25,000 mark for the first time since March 17 following a hawkish Fed announcement amidanother turbulent week for the crypto industry.
Within the span of 30 minutes on June 15, the price of Bitcoin fell 4% from $25,867 to $24,819 according to data from TradingView. At the time of publication Bitcoin has regained ground and is holding just above $25,000.
Over the past week Bitcoin had been holding around the $26,000 region as the market came to grips with the SEC’s legal action against crypto exchange heavyweights Coinbase and Binance as well as increasing macroeconomic uncertainty around interest rate signals from the United States Federal Reserve.
The sharp drop in price arrived roughly three hours after the Federal Reserve announced a pause on interest rate hikes, following a fifteen-month-long campaign of rate increases to combat surging inflation.
While the market was almost unanimously expecting a rate pause, the Federal Open Markets Committee statement hinted at further rate hikes in the future, which typically blunts investor excitement for risk assets like cryptocurrencies.
According to eToro Market Analyst Josh Gilbert, Federal Reserve chair Jerome Powell has made it quite clear that this is only a temporary pause, something that could spell further trouble for Bitcoin in the long-term.
“Much of the positivity we’ve seen from risk assets this year, including Bitcoin, is built on the expectation that inflation will fall and interest rates will peak, and then begin to be cut,” Gilbert said.
Inflation is moving in the right direction but the comments from Jerome Powell signify that rates could stay higher for longer, which would put Bitcoin on the back foot.”
The second largest cryptocurrency by market cap, Ether, also took a hit, falling more than 5% from $1,727 to $1,631 in the same time frame. Altcoins were not spared from the bearish sentiment either, with many of the tokens labeled as securities in the SEC’s lawsuits stumbling another than 3%.
Cardano is currently down 3.4% in the last 24 hours, while Polygon and Solana fell 3.3% and 2.8% respectively.
According to Cointelegraph analyst Marcel Pechman, current options data for Bitcoin suggests a further slide to the downside, especially when considering the regulatory hostility towards the crypto industry on U.S. soil combined with the likelihood of further rate increases from the Fed in the coming months.