In a turbulent week for the crypto industry, Bitcoin (BTC) has experienced a significant drop below the $25,000 mark for the first time since March 17. Within just 30 minutes on June 15, the price of Bitcoin plummeted by 4%, falling from $25,867 to $24,819, as reported by TradingView. However, it managed to regain some ground and was hovering slightly above $25,000 at the time of publication.
The past week witnessed Bitcoin maintaining its position around the $26,000 region while grappling with the legal actions taken by the Securities and Exchange Commission against major cryptocurrency exchanges Coinbase and Binance. Additionally, the industry faced mounting macroeconomic uncertainties, particularly regarding interest rate signals from the United States Federal Reserve.
The sharp decline in Bitcoin’s price occurred approximately three hours after the Federal Reserve announced a temporary pause on interest rate hikes. This decision followed a 15-month-long campaign of rate increases aimed at combating rising inflation. Although the market had anticipated a rate pause, the Federal Open Markets Committee’s statement hinted at potential future rate hikes. Such indications tend to dampen investor enthusiasm for risk assets like cryptocurrencies.
According to Josh Gilbert, a market analyst from eToro, Federal Reserve Chair Jerome Powell’s remarks suggest that the rate pause is only temporary, which could spell further challenges for Bitcoin in the long run. Gilbert explains that the positive outlook for risk assets, including Bitcoin, was largely based on the expectation of declining inflation and the eventual reduction of interest rates. However, Powell’s comments imply that rates may remain higher for an extended period, putting Bitcoin at a disadvantage.
Ether (ETH), the second-largest cryptocurrency by market capitalization, also experienced a substantial drop of over 5%, falling from $1,727 to $1,631 within the same time frame. Altcoins, including tokens implicated as securities in the SEC’s lawsuits, were not spared from the bearish sentiment. Cardano (ADA) dropped 3.4%, while Polygon (MATIC) and Solana (SOL) declined by 3.3% and 2.8% respectively.
Cointelegraph analyst Marcel Pechman suggests that current options data for Bitcoin indicates a further downward slide. The regulatory hostility toward the crypto industry in the United States, coupled with the likelihood of additional rate increases by the Federal Reserve in the coming months, adds to the concerns surrounding Bitcoin’s price trajectory.
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