Bitcoin (BTC) has experienced a significant drop, falling below $29,500 for the first time since June 21. This dip comes amid market uncertainty ahead of the U.S. Federal Reserve’s policy rate decision this week.
Bitcoin Dips Below $30,000 Amid Market Uncertainty Ahead of Federal Reserve Meeting
Since March 2022, the Federal Reserve has implemented its fastest rate hike policies in decades, raising the benchmark borrowing rates from zero to a range between 5% and 5.25%. These rate hikes are a primary tool used by the central bank to slow down inflation by increasing borrowing costs, which can also slow the rise of stocks and cryptocurrencies.
In June, annual inflation decreased to 3% compared to 9.1% a year ago, bolstering market hopes that the Federal Reserve would ease its hawkish stance. Despite these hopes, the central bank paused its hike for the first time in ten consecutive meetings last month.
awaiting the policy rate meeting
The market is now awaiting the policy rate meeting, with the CME FedWatch Tool posting a 99.8% probability that the Federal Reserve will announce a 25-basis-point hike in this week’s meeting. This expectation of a rate hike has also bolstered the dollar, with the dollar index (DXY) rising above 100 points last week.
However, if the Federal Reserve increases its hawkishness in the latest meeting, hinting at a prolonged rate hike regime or announcing more than one rate hike for the rest of the year, the markets could witness a significant sell-off due to fears of a potential recession.
a green light by federal reserve can turn things around
On the other hand, if the Federal Reserve‘s language suggests that this rate hike will be the last one for this cycle, the markets may receive a green signal to move upwards. Bitcoin’s trading volumes have also decreased significantly leading up to the Federal Reserve‘s meeting, with three consecutive days of less than $10 billion in daily volumes since last Friday.
Ithe Bitcoin market is currently facing a period of uncertainty, with the cryptocurrency’s value dipping below $30,000. The upcoming Federal Reserve meeting will likely play a significant role in determining the future trajectory of Bitcoin and other cryptocurrencies.
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