Bitcoin (BTC-USD) and other major cryptocurrencies experienced a dip in value on Thursday, erasing gains made earlier in the week. The decline came after the Federal Reserve signaled that interest rates would remain high for an extended period, with Bitcoin retreating 2.3% to $26.5K.
The Federal Open Market Committee maintained its position on Wednesday, keeping rates unchanged but projecting one more hike at one of its two final gatherings this year. Officials also raised their projections for the fed funds rate at the end of 2024 and 2025, both by 50 basis points.
Despite the downturn, Didar Bekbauov, founder and CEO of Bitcoin joint mining company Xive, contended that the stagnant rate increase is positive for Bitcoin. He suggested that this could reduce the attractiveness of mainstream financial assets to institutional investors in the long term, potentially driving a new rally in Bitcoin's price.
However, the post-Fed session saw a decline in crypto prices and crypto-linked stocks. The overall crypto market value was down 2% to $1.05T, with stocks such as MicroStrategy (NASDAQ:MSTR), Coinbase Global (NASDAQ:NASDAQ: COIN ), Riot Platforms (NASDAQ:RIOT), Marathon Digital (NASDAQ:MARA), and Bit Digital (NASDAQ:BTBT) experiencing downward pressure.
Major altcoins also struggled on Thursday, with Ether changing hands at $1,585, down about 2.6% from Wednesday. Other major altcoins such as TON and OP also experienced losses.
Crypto investors are also dealing with concerns over job cuts at the U.S. unit of Binance, the world's largest crypto exchange by trading volume, and growing regulatory scrutiny. In June, the Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its founder, Changpeng “CZ” Zhao, for securities violations.
Despite these challenges, some analysts believe that Bitcoin is likely to remain within its recent range between $25,000 and $30,000. Riyad Carey, research analyst at digital asset data platform Kaiko, noted that the market needs a catalyst to mount any serious rally.
On Friday, Federal Reserve Governor Michelle Bowman supported the FOMC’s decision to maintain the target range for the federal funds rate but indicated that further rate hikes will likely be needed to return inflation to 2%. Despite "considerable progress" in lowering inflation with rising interest rates, Bowman sees "continued risk" that energy prices could rise further and reverse recent progress.
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