Bitcoin experienced minimal movement on Thursday after a turbulent session, as the Federal Reserve’s forecast of prolonged high interest rates overshadowed signs of cooling near-term inflation.
The world’s largest cryptocurrency edged up 0.4% in the past 24 hours, reaching $67,484.6 by 02:05 ET (06:05 GMT). This week, Bitcoin exhibited significant volatility, climbing as high as $70,000 before experiencing a sharp decline.
Bitcoin Rangebound as Fed Projects Only One Rate Cut This Year
Traders remained cautious towards Bitcoin and other cryptocurrencies due to the anticipated prolonged period of high U.S. interest rates. While the Fed maintained the current rates on Wednesday, as expected, Fed Chair Jerome Powell indicated the likelihood of only one rate cut this year, a stark contrast to the earlier forecast of three cuts.
Several Fed policymakers advocated for no rate cuts this year, emphasizing the need for further progress in reducing inflation. Additionally, the Fed revised its inflation forecast upwards for the year.
These remarks followed data released earlier on Wednesday, which showed a slight easing in U.S. consumer inflation for May, surpassing expectations. Despite an initial rise in Bitcoin following the inflation data, the cryptocurrency’s gains were reversed after the Fed’s comments.
High interest rates are generally unfavorable for speculative assets such as cryptocurrencies, as they reduce the liquidity available for investment in the sector. Although recent capital flow data indicated that institutional investors continued to inject funds into crypto, this influx has had little impact on token prices.
Attention now shifts to the producer price index inflation data, expected later on Thursday, for further insights into U.S. inflation trends.
Crypto Price Update: Altcoins Drift Lower Amid Rate Jitters
The prospect of prolonged high U.S. interest rates also pressured broader cryptocurrency prices.
Ethereum, the world’s second-largest cryptocurrency, dropped 0.3% to $3,499.09, erasing further gains from the previous month. ADA, XRP, and SOL saw gains between 0.6% and 1.7%, yet remained down for the week.
Among meme tokens, SHIB declined by 1.6% while DOGE increased by 3%. However, sentiment towards these tokens cooled, mirroring the waning interest in meme stocks on Wall Street.
GameStop Corp (NYSE) continued to decline on Wednesday, erasing most of the gains from a late-May rally.
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