Following a hawkish announcement by the Federal Reserve and a turbulent week for the crypto industry, the price of Bitcoin experienced a significant decline, dropping below the $25,000 threshold for the first time since March 17.
Within just 30 minutes on June 15, Bitcoin saw a 4% plunge from $25,867 to $24,819, before recovering slightly and stabilizing just above the $25,000 mark.
Throughout the week, Bitcoin had been hovering around the $26,000 range amidst the Securities and Exchange Commission’s legal actions against major crypto exchanges Coinbase and Binance, coupled with growing macroeconomic uncertainties surrounding the interest rate signals from the Federal Reserve.
However, the sharp decline in Bitcoin’s price occurred shortly after the Federal Reserve announced a pause on interest rate hikes, marking the end of a 15-month-long campaign aimed at tackling rising inflation.
While a rate pause was largely anticipated by the market, the Federal Open Markets Committee statement alluded to future rate hikes, dampening investor enthusiasm for risk assets like cryptocurrencies.
According to eToro market analyst Josh Gilbert, Federal Reserve Chair Jerome Powell’s indication that the pause is temporary could potentially pose further challenges for Bitcoin in the long run.
Speaking about the dip, 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.”
Not surprisingly, the bearish sentiment also affected Ether, the second-largest cryptocurrency by market capitalization, which experienced a more than 5% drop from $1,727 to $1,631 within the same timeframe.