Bitcoin
Bitcoin extends its early May slide, falling to $57,000 as Fed keeps rates unchanged
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Bitcoin fell to its lowest level in more than two months in early May as the Federal Reserve held interest rates steady.
At one point, the cryptocurrency fell 5% to $56,526.00, its lowest level since Feb. 27, according to CoinMetrics. The latest drop was about 4% to $56,954.13.
Investors have been focusing on the latest interest rate decision from the Federal Reserve, which concluded its two-day monetary policy meeting on Wednesday afternoon. The central bank maintained its short-term reference interest rate unchanged, as expected. The federal funds rate has been in a target range between 5.25% and 5.50% since July 2023.
“The broader macro picture has deteriorated for assets like crypto, which thrive on liquidity,” Geoff Kendrick, head of digital asset research at Standard Chartered, said in a note on Wednesday. “Broader measures of U.S. liquidity…have deteriorated rapidly since mid-April.”
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Bitcoin Falls to Its Lowest Level Since February
Bitcoin briefly rose to $60,989.58 before reversing lower.
“Higher real interest rates have likely supported the dollar and weighed on bitcoin over the past month,” said Zach Pandl, head of research at Grayscale Investments. “The FOMC statement expressed concern about inflation but did not take rate cuts off the table. An expectation of future rate cuts would support the price of bitcoin and crypto markets more broadly.”
Bitcoin has been trading in a tight range, with the main catalysts for the cryptocurrency – US exchange-traded funds and the halving – now behind it. Your retreat from March all-time highs intensified this week amid broader risk-on sentiment. Bitcoin fell more than 10% in the week and on Tuesday it fell posted your worst month since November 2022.
Kendrick also pointed to five consecutive days of outflows from US bitcoin ETFs and a “poor” reaction to the launch of spot bitcoin ETFs in Hong Kong this week. Bitcoin’s drop also comes a day after former Binance CEO Changpeng Zhao was sentenced to four months in prison on money laundering charges.
Bitcoin investors expect a strong recovery for the cryptocurrency later this year, but say its price could continue cutting for the next few weeks given macro and geopolitical pressures.
“We could see a 1-2 month consolidation in bitcoin prices, trading in a range with $10K swings on both sides,” Bitfinex analysts said. “We hope that the positive impact of the halving, which caused a reduction in the supply of bitcoin, will be seen in the coming months.”
—CNBC’s Michael Bloom and Jeff Cox contributed reporting.