Bitcoin Price Drops to $64,470 Following Fed Rate Hold
Bitcoin Price – Bitcoin has fallen below the $65,000 mark following the United States Federal Reserve’s decision to keep interest rates unchanged and reports of escalating tensions in the Middle East. On July 31, Bitcoin (BTC) dipped to $64,549, marking the first time it has fallen below $65,000 since July 25, according to CoinMarketCap data. Although it briefly spiked to $65,075, it has since remained below this key level, currently trading at $64,470.
Impact of Federal Reserve’s Decision
The price movement coincided with the Federal Open Market Committee’s (FOMC) decision to maintain interest rates at 5.25% to 5.5%, as expected. Fed Chair Jerome Powell described the economy as expanding at a “solid pace,” with positive signs for GDP growth and Private Domestic Final Purchases (PDFP), despite a slowdown in consumer spending growth. Powell reiterated the Fed’s commitment to reducing inflation to 2%, down from its current rate of 2.5%, in support of a robust economy.
Market Reactions and Predictions
Before the FOMC announcement, markets did not anticipate a change in rates until September. However, pseudonymous crypto commentator Seth noted that Bitcoin’s relative strength index (RSI) is currently “oversold,” which could indicate a potential buying opportunity. Seth commented on July 31 via X, “The FOMC is used to liquidate Degen Retails that don’t know how to trade and use way too high leverage.”
Additionally, Bitcoin’s price drop follows reports of heightened tensions in the Middle East. On July 31, Reuters reported the assassination of Hamas leader Ismail Haniyeh in Tehran. This is not the first time Bitcoin has experienced price declines due to Middle Eastern tensions; a similar drop occurred on April 19 after explosions were reported at Isfahan airport in Iran.
Optimism for September Rate Cuts
Despite the Fed’s current stance, there is optimism about a potential rate cut in September. The Kobeissi Letter remarked, “While Fed Chair Powell has not confirmed a September rate cut, he sounds more optimistic.” The report suggests that further declines in inflation could lead to a September cut.
Moody’s Analytics chief economist Mark Zandi expects inflation data to align with the Fed’s forecast, increasing the likelihood of a September rate cut. “The inflation data must cooperate for the Fed to follow through, but all indications are that it will,” Zandi wrote.
Meanwhile, Michael van de Poppe, founder of MN Trading, believes Powell’s “dovish tone on the future” is positive for Bitcoin and altcoins.
Early Performance of Bitcoin and Market Sentiment
As global investors respond to these developments, Bitcoin’s price is expected to react strongly to any positive surprises. The market remains attentive to both inflation data and geopolitical events, which could influence future price movements and investment strategies.
FAQs
Why has Bitcoin fallen below $65,000 recently?
Bitcoin’s price fell below $65,000 due to a combination of factors: the Federal Reserve’s decision to keep interest rates unchanged and escalating conflicts in the Middle East. The Federal Reserve’s decision to maintain the interest rate between 5.25% and 5.5% contributed to market volatility, while reports of geopolitical tensions also played a role in the price decline.
What did the Federal Reserve decide regarding interest rates?
The Federal Reserve decided to keep interest rates unchanged at 5.25% to 5.5%. This decision was in line with market expectations and was part of the Fed’s broader strategy to manage inflation and support economic growth.
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