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Bitcoin, the largest cryptocurrency by market capitalization, plummeted to an intraday low of $58,528 on Monday, the steepest drop since mid-April, as ongoing pessimism about the number of rate cuts weighed on sentiment for crypto.
The decline in crypto at the start of this week came amid doubts about the Federal Reserve’s scope to cut interest rates quickly from a two-decade high.
Amid the current situation on the market, Fed officials have recently delivered crucial comments meant to have significant implications for cryptocurrencies.
Federal Reserve Governor Michelle Bowman said Tuesday that the moment was not yet appropriate to begin decreasing interest rates, dampening hopes for U.S. interest rate cuts. She also stated that if inflation does not subside, she will consider boosting interest rates.
Tomiwabold OlajideThese remarks reflect a prevailing sentiment at the central bank, with most policymakers stating in recent weeks that, while they still anticipate inflation to return to the Fed's 2% target, they require more evidence.
The S&P 500 and Nasdaq 100 erased gains after Fed Governor Michelle Bowman made her comments.
Here's how crypto market responded
Bitcoin and cryptocurrencies, however, posted a muted response, barely unmoved. Bitcoin bounced above $62,000 on Tuesday, reaching highs of $62,400.
Cryptocurrencies also rose broadly, with a handful of cryptoassets in the green at press time. Frog-themed cryptocurrency Pepe was trading higher by 9%, and Dogwifhat (WIF) was also up 7.30%. Notcoin (NOT) was up 13% in the same time frame.
Although slightly lower, Bitcoin was little moved in the last 24 hours, up 0.97% to trade at $61,595 at press time.
Bitcoin reached a high of $73,798 in March but is trailing traditional investments such as stocks, bonds and gold this quarter. The 200-day moving average, which is currently around $57,738, is being watched as a potential zone of support for the price in the event of further declines.
In the following days, investors and market participants will continue to monitor the Fed's policy decisions closely and their implications for cryptocurrencies.
Arman Shirinyan
Alex Dovbnya
Vladislav Sopov
Dan Burgin