Bitcoin Drops To 3-Month Low Following Fed Rate Decision - Forbes

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Topline

Cryptocurrency prices continued to fall Thursday morning after the Federal Reserve announced it would take a break from hiking interest rates this month but potentially renew its aggressive action later this year—pushing the price of bitcoin below $25,000 for the first time since March as market observers worry over the potential economic implications.

Key Facts

Bitcoin took a 3% dive late Wednesday, with the price decline only continuing into Thursday morning and settling around $24,800 by 9:00 a.m. ET—a roughly $1,000 drop.

Other cryptocurrencies followed suit, with ether down 6%, Cardano's ada down 6% and sol down 5% for the day, according to MarketWatch.

The slide began after the Fed struck a more hawkish-than-anticipated tone at its latest policy meeting, saying it was pausing interest rate hikes after enacting nine over the past 12 months, but projecting top rates could hit 5.6% later this year—more than the 5.1% previously projected.

Tangent

The Fed’s outlook—seen as an overall positive to the market, but tempered with some unknowns for the future—is compounded with trouble in the crypto industry amid regulators’ lawsuits against two major currencies. Binance and Coinbase are both facing legal woes from the Securities and Exchange Commission, which threaten major implications for the sector as Binance suspended U.S. dollar deposits taken off the market altogether while some trading platforms like Robinhood have removed certain coins in the wake of the lawsuits. Binance coin continued its downward slide started earlier this month by the SEC’s suit, falling 5% Thursday morning. Another casualty of the recent concerns, Coinbase stock was down 3%.

Key Background

Bitcoin took a similar dive in mid-March, when it dipped to $20,100. That fall was also prompted by a recent interest rate hike, but compounded with the collapse of Silvergate Bank, a crypto-focused lender. Silicon Valley Bank was also taken over by the Federal Deposit Insurance Corporation around that time following its own collapse.

What To Watch For

BlackRock, one the world’s largest asset management companies with $15 trillion in assets, is planning to file an application for a bitcoin exchange traded fund soon, the crypto site CoinDeck reported Thursday morning, citing a person familiar with the situation. It’s not clear whether the ETF will be a spot or futures, but the SEC has rejected every application for spot bitcoin ETFs for trading, according to CoinDesk. Forbes reached out to BlackRock for comment.