Markets
Key Fed Comment Shakes Cryptocurrency Market; what comes next? By U.Today
U.Today – , the largest cryptocurrency by market capitalization, plummeted to an intraday low of $58,528 on Monday, the sharpest drop since mid-April, as continued pessimism over the number of rate cuts weighed in sentiment towards cryptocurrencies.
The crypto’s decline earlier this week came amid doubts over whether the Federal Reserve could quickly cut interest rates from a two-decade high.
Amid the current market situation, Fed officials recently made crucial comments that are expected to have significant implications for cryptocurrencies.
Federal Reserve Governor Michelle Bowman said on Tuesday that the time was not yet appropriate to begin lowering interest rates, dampening hopes for U.S. interest rate cuts. She further stated that if inflation does not decrease, she will consider raising interest rates.
These observations reflect a prevailing sentiment at the central bank, with most policymakers saying in recent weeks that while they still expect inflation to return to the Fed’s 2% target, they need more proof.
The S&P 500 and gains erased after Fed Governor Michelle Bowman made her comments.
See how the crypto market responded
Bitcoin and cryptocurrencies, however, posted a muted, almost unchanged response. Bitcoin jumped above $62,000 on Tuesday, reaching highs of $62,400.
Cryptocurrencies have also risen broadly, with a handful of crypto assets in the green so far. The frog-themed cryptocurrency Pepe was trading up 9%, and Dogwifhat (WIF) was also up 7.30%. Notcoin (NOT) is up 13% over the same period.
Although slightly lower, Bitcoin has moved little in the last 24 hours, rising 0.97%, trading at US$61,595 at press time.
Bitcoin reached a high of $73,798 in March, but is trailing traditional investments such as stocks, bonds and gold this quarter. The 200-day moving average, which is currently around $57,738, is being watched as a potential support zone for the price in case of further declines.
In the coming days, investors and market participants will continue to closely monitor the Fed’s policy decisions and their implications for cryptocurrencies.