The central bank has tightened its forecasts for interest rates.
Bitcoin (BTC) is down 4% in the last 24 hours and falls below $25,000, while Ethereum (ETH) falls 6% and is trying to hold $1,600.
The fall in the markets occurred after knowing the latest monetary policy decision of the Federal Reserve (Fed). The US central bank followed through on forecasts, pausing its rate hike cycle after 10 consecutive hikes.
Thus, the Federal Reserve (Fed) took “a ‘hawkish’ (aggressive) pause to cool the current enthusiasm” of the market. That was the goal of the Fed after pausing raising interest rates in the United States and anticipating two more rate hikes in 2023.
The Fed has revised its interest rate forecast and has raised this year’s to 5.6%, from the 5.1% it had estimated in March. In this sense, two more increases of 25 basis points are anticipated until the end of the year.
Similarly, it has raised the estimates for 2024, from 4.3% to 4.6%, and for 2025, from 3.1% to 3.4%.
The Fed and Jerome Powell
The president of the Fed has assured that “almost all” the members of the central bank have agreed that “some more increase would be appropriate this year”, although it is “reasonable” to go a little slower.
“It will be appropriate to cut rates at a time when inflation is coming down significantly. And again, we’re talking about a couple of years. As anyone can see, not a single person on the Committee wrote a rate cut this year, nor do I think it’s appropriate,” Powell said.
The Community Reacts
Experts point out that the comments by the central bank and its president leave a more aggressive scenario than initially proposed, and many are already forgetting that there is even a slight chance of seeing an interest rate cut this year.
Still, others point out that the Fed will not achieve its goal of bringing inflation to 2% without triggering a recession.
According to TickMill Group, although some risk analysts were optimistic before the Fed meeting, crypto assets were still too stagnant. “The current cryptocurrency problem is the latest wave of negative news affecting the sector,” they highlight while noting that uncertainty has grown again in the digital asset space.
“BTC’s downward correction has led the price to trade within a corrective bearish channel. The last few attempts to break above the $27,415 level have failed so far. However, while $24,930 is supportive, the structure can still be seen as a bullish flag, keeping the focus on an eventual breakout towards the $32,185 level,” TickMill Group explains.
Markus Levin, co-founder of XYO Network, has been more optimistic and has pointed out that “the global macro configuration is changing significantly” in the ‘crypto’ market, which would have already bottomed out.
“I expect there to be sideways action for BTC and other coins for a few months ahead, punctuated by bouts of volatility. However, when the BTC halving occurs next year, I think we will be on the crest of the wave,” Levin added.
In the rest of the market, notable falls in the ‘altcoin’ space. Ripple (XRP), Cardano (ADA), or Polygon (MATIC) yield between 5% and 6%.
Binance coin (BNB) is cutting back sharply after numerous analysts have accused Zhao and Binance of trying to manipulate its price.
By Audy Castaneda
