Markets
FOMC Keeps Rates Steady, Bitcoin, Ethereum Prices Drop
Chairman of the Federal Reserve Jerome Powell
Jerome Powell Jerome Hayden “Jay” Powell is an American lawyer and investment banker who has served as the 16th chairman of the Federal Reserve since 2018. Finance recently hinted at a potential rate cut in September, causing a significant surge in the stock market. The tech-heavy Nasdaq 100 rose 3.3% and the S&P 500 rose 2%. In contrast, Bitcoin (BTC) fell 1.3% to $66,088, and Ethereum (ETH) fell 1.11% to $3,313. Over the past 24 hours, the global cryptocurrency market capitalization also fell 0.71% to $2.39 trillion.
Market analysts suggest that the cryptocurrency price decline is a short-term decline. Despite being in a bear market, Bitcoin and other cryptocurrencies are showing bullish signs. Bitcoin is still struggling to break the $70,000 mark, but its performance in August, leading up to potential rate cuts, will be closely watched.
The Fed Reserve maintains stability
On July 31, the U.S. Federal Reserve concluded a two-day meeting of the Federal Open Market Committee (FOMC), deciding to keep the benchmark interest rate unchanged at 5.25% – 5.50%. This decision met Wall Street’s expectations and marked the eighth consecutive meeting without a rate change.
Is the market recovery coming?
Second HolinessThe FOMC’s decision to keep current interest rates led to an initial decline in cryptocurrency prices. Traders were hoping for a rate cut, which hasn’t happened since March 2020. A future rate cut could signal bullish trends for both stocks and cryptocurrencies, potentially lifting markets for the rest of 2024. Despite the initial sell-off, markets are expected to stabilize unless another significant event impacts the cryptocurrency sector.
Bullish outlook, bearish sentiment
The aggressive accumulation of bulls and the increase in negative sentiment among investors could set the stage for a substantial market rebound. Despite the anticipation surrounding the FOMC meeting, the impact on cryptocurrencies was limited, as the rate pause was already priced in.
Previous Fed decisions have had minimal impact on Bitcoin prices.
A look into the past & the future
Historically, the FOMC’s actions have affected all asset classes. In 2020 and 2021, Bitcoin and other altcoins soared when the Fed cut rates to zero, only to reverse the trend in 2022 when rates began to rise. Since then, investors have moved trillions into low-risk assets, with money market funds accumulating over $6.1 trillion, enjoying an average return of 5%.
Key indicators to watch
Bitcoin’s immediate resistance was recorded at $66,852, with support at $65,000. The Relative Strength Index (RSI) signals oversold conditions, suggesting further declines are possible if the price breaks below $65,900.
Investors are now watching the FOMC meeting closely for clues about inflation and economic growth, which could influence Bitcoin’s next move. The interplay between the Federal Reserve’s decisions and market reactions will be crucial in determining the future trajectory of both cryptocurrencies and traditional assets.
Read also: Why is Bitcoin price falling today? Is a major correction imminent?
The Fed’s decision has sent shockwaves through the market. Will this impact your investment strategy?