The Federal Reserve’s decision had immediate repercussions in the financial markets, including the crypto sector.
After a downward trend since April 30, with prices falling below $58,000, Bitcoin (BTC) has made a notable recovery. As of Friday morning, the crypto asset briefly reclaimed the $60,000 levels, signaling a potential trajectory towards the crucial $65,000 threshold analysts believe is pivotal for a potential rally. This rebound in Bitcoin’s value is largely attributed to the Federal Reserve’s decision to maintain interest rates unchanged, citing insufficient progress toward lowering inflation.
Unchanged Interest Rates
The Federal Reserve made it clear on Wednesday that high inflation has been a persistent issue in recent months, stating that it will hold off on cutting interest rates until it is more confident that price increases are sustainably slowing towards its 2% target.
This decision has kept the bank’s key rate at its highest level in over two decades, ranging from 5.25% to 5.5% since last July. By maintaining high borrowing costs, the Fed aims to temper economic growth and alleviate the pressures contributing to rising prices.
The Fed’s decision was announced after its latest meeting, during which it chose to keep its key rate at approximately 5.3%.
Jerome Powell, the Fed Chair, emphasized that, regardless of this year’s upcoming US presidential election, the central bank will continue to base its interest rate decisions on independent analysis.
Powell cautioned against introducing additional considerations into the decision-making process, stating that doing so could lead to unintended negative outcomes.
Market Response to Fed’s Unchanged Rates
The Federal Reserve’s decision had immediate repercussions in the financial markets, including the crypto sector. Market indicators show a slight recovery from recent lows, with the industry now valued at approximately $2.22 trillion, marking a 3.34% increase within the past 24 hours.
The positive market sentiment has buoyed Bitcoin, witnessing a rise of over 4% in value.
However, despite this uptick, the crypto asset remains more than 10% below its recent peak of $66,000 in April and has experienced a significant decline of over 22% from its all-time high of $73,000 in March.
The resurgence is not limited to Bitcoin alone, as other altcoins have also seen positive movements. Ethereum (ETH) has surged by 3.35%, crossing the $3,000 mark for the first time since Tuesday.
Similarly, Solana (SOL), Binance Coin (BNB), Dogecoin (DOGE), and Shiba Inu (SHIB) have experienced gains ranging from 3.4% to 9.34% over the past day, indicating a broader market recovery across various digital assets.
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