Fed holds rates steady: Bitcoin market reacts with a…
Did the Fed's decision to hold rates trigger Bitcoin's dip?
- Fed keeps rates steady, drawing criticism from analysts.
- Bitcoin price sees declines but BTC ETFs show inflows.
Meeting expectations and aligning with 0.6% projections probability from the CME FedWatch Tool, the US Federal Reserve announced on 12th June that the benchmark interest rates will remain unchanged.
After a two-day Federal Open Market Committee (FOMC) meeting, members decided to maintain the rates at 5.25% – 5.50% for the seventh consecutive time. Notably, this decision was also in line with Wall Street predictions.
Remarking on this with a touch of criticism Anthony Pompliano, in a recent stream said,
“It is arrogant for the central bank to believe that they can set an interest rate… the market is the true setter of interest rates.”
Following the announcement, the crypto market witnessed a significant downturn. As of 13th June, Bitcoin [BTC] dropped by 2.35% over the past 24 hours, while Ethereum declined by 3.66% at the time of writing.
Only one rate cut by the end of 2024
The FOMC members have revised their individual projections for the number of rate cuts expected this year. Initially, in March, the FOMC projected three rate cuts by the end of 2024. Now, they have reduced this expectation to just one rate cut.
The revised forecast means that the FOMC now anticipates only one 0.25 percentage point rate cut before the end of the year.
This announcement surprised some analysts who expected more aggressive rate cuts. Some analysts believe the Fed might need to reconsider and potentially adjust this forecast in the coming months if economic conditions change.
Amidst all this, Bitcoin was experiencing a drop in new addresses as per AMBCrypto’s analysis of Galssnode.
Bitcoin stands strong
Despite Bitcoin’s recent bearish momentum, not all metrics point to a negative outlook. According to AMBCrypto’s analysis of Santiment data, there has been a notable spike in Social Dominance metrics.
Additionally, the Relative Strength Index (RSI) has not indicated clear signs of either buying or selling pressure.
Furthermore, Bitcoin’s spot Exchange Traded Funds (ETFs) experienced inflows of $100.8 million, marking a turnaround after two consecutive days of outflows.
Pompliano, best put it when he said,
“Bitcoin is the only asset that I’m aware of that is an asset class to itself which has outperformed inflation.”
