On Wednesday, Bitcoin had an almost 6% fall, which was its worst monthly performance since April 2022. This decline happened as a result of investors taking their money out of cryptocurrency in advance of the Federal Reserve’s announcement on interest rates.
With a 5.6% decline, Bitcoin reached its lowest level since late February. It is currently down 4.8% at $57,001. More subdued losses were seen by Ether, which fell 3.6% to $2,857, its lowest point since February. The price of the biggest cryptocurrency in the world is currently 22% below its top of $73,803 in March, which suggests a technical entry into a bear market. Still, it has increased by 35 percent since the start of this year and by double when compared to the same time last year. This is mostly because billions of dollars have been poured into recently introduced exchange-traded funds since January.
What is impacting the price of bitcoin?
As Bitcoin continues to drop from its all-time highs, it is presently trading around $56,550. A number of causes are contributing to this loss. The world’s largest cryptocurrency exchange Binance’s founder Changpeng Zhao was sentenced to four months in prison on Tuesday after pleading guilty to charges of enabling money laundering at his exchange. These developments, along with the expectation surrounding the Federal Reserve’s interest rate decision today, have a compounding effect on Bitcoin prices, according to Siddharta Gupta, SVP, Business and Strategic Alliances, CoinDCX, in an interview with Livemint.
In premarket trading in the United States, stocks linked to cryptocurrencies saw a drop in value. The cryptocurrency exchange Coinbase suffered a 4.6% decline in share price, and mining firms Riot and Marathon Digital reported 4.2% to 4.3% declines.
The Federal Open Market Committee (FOMC) is expected to keep interest rates at their present levels in light of the state of the economy as a whole. Nonetheless, a growing number of investors are beginning to view the possibility that the central bank may decide not to lower interest rates all year long. Assets that are susceptible to interest rate fluctuations, like as cryptocurrencies, equities and bonds from developing markets, and maybe even commodities, suffer from this mindset.
US Fed decision
The US Federal Reserve made the decision to keep interest rates the same while hinting that rate reductions would be postponed. Furthermore, a mixed Hong Kong debut of investment products tracking competitor cryptocurrency Bitcoin and the top cryptocurrency in the world had an impact on Bitcoin’s decline.
Edul Patel, CEO of Mudrex, said Bitcoin has traded at $57,000 in the last 24 hours after the US Federal Reserve’s decision to keep its benchmark interest rate between 5.25% and 5.50%. Bitcoin has been in decline since late February, owing mostly to macroeconomic factors and geopolitical uncertainty. The next level of support is $56,600, with resistance at $58,800.