Bitcoin (BTC-USD) experienced a dip in value on Thursday, September 21, 2023, erasing gains made earlier in the week. The decline comes a day after the Federal Reserve signaled that interest rates will remain high for an extended period. The original cryptocurrency retreated 2.3% to $26.5K at 11:33 a.m. ET, after reaching as high as $27.4K in the run-up to the central bank’s policy-decision meeting.
The Federal Open Market Committee kept rates unchanged on Wednesday, as expected, though policymakers maintained its projection of 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 dip in value, Didar Bekbauov, founder and CEO of bitcoin joint mining company Xive, contends that the stagnant rate increase is a positive development for bitcoin. He stated that it “reduces the attractiveness of mainstream financial assets that can be appealing to institutional investors in the long term.” Bekbauov further suggested that this capital retention could help bolster BTC’s price and drive a new rally in the coming weeks.
However, in the post-Fed session, crypto prices and crypto-linked stocks suffered. The overall crypto market value was down 2% to $1.05T according to data from CoinMarketCap, 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) also experiencing downward pressure.
Major altcoins also struggled on Thursday, joining equities in a swoon as investors worried over the prospect of at least one more Federal Reserve rate hike. Ether was recently changing hands at $1,585, down about 2.6% from Wednesday, and off more than 4% from its highs earlier in the week. Other major altcoins such as TON and OP also experienced losses.
The U.S. stock market also saw a drop amid the renewal of investor fretfulness about a future Federal Reserve interest rate hike that could hamstring the economy and unsettle asset markets. The tech-heavy Nasdaq and S&P 500 fell 1.5% and 1.2%, respectively.
Crypto investors are also dealing with concerns over severe 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, wrote that “the market needs some sort of catalyst – whether spot ETF approval or change in macro conditions – to mount any serious rally,” noting that volumes continue to be at multi-year lows while liquidity is relatively stable.
