Bitcoin Dips to $42.4K

1 Feb 2024
  • Federal Reserve chair Jerome Powell tempered expectations of an imminent interest rate cut in March during Wednesday's FOMC press conference.
  • Bitcoin dipped to $42,300, while crypto majors ETH, ADA, DOT fell 3%-4% with Solana's SOL tumbling over 6%.
  • Bitcoin remains in a channel consolidating without clear direction between $42,000 and $44,000, Swissblock said.

Cryptocurrencies tumbled lower Wednesday with bitcoin (BTC) sliding below $43,000 as Federal Reserve Chair Jerome Powell's hawkish comments cooled hopes about an imminent rate cut.
In a universally anticipated move, the Fed left its benchmark fed funds rate range unchanged at 5.25%-5.5% following the first Federal Open Market Committee meeting of the year. Market participants were more keen to monitor clues about when the Fed might start lowering rates, with many observers expecting it to happen as soon as the next meeting in March.
"Based on the meeting today," said Powell at his post-meeting press conference, "I don't think it's likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to [cut]."

Risk assets including cryptos turned sharply lower in the immediate aftermath of that remark. BTC fell to $42,300 from its daily high of $43,700 and was down 2.3% over the past 24 hours. The CoinDesk 20 {{CD20}} index, a broad crypto market benchmark that covers some 90% of the total market value of digital assets, declined nearly 3% during the same time.
Other major cryptocurrencies such as ether (ETH), Cardano's ADA, Avalanche's AVAX and Polkadot's DOT dropped 3%-4%, while Solana's SOL lost over 6% during the day buckling below $100.
In traditional markets, the Nasdaq tumbled 2.2% and the S&P 500 1.6%.
"The market has gotten ahead of itself on the rates side," Alex Krüger, macro analyst and co-founder of Asgard Markets, said in a X post. "Cuts starting in May or June, not March."
Indeed, the odds of a March rate cut have been trimmed to a current 34.5% from about 65% prior to today's developments, according to the CME FedWatch Tool.
Ruslan Lienkha, chief of markets at Web3 fintech platform YouHodler, said that "any possible hawkish rhetoric about the longer-than-expected time of high rates may trigger a correction in the stock market and as a consequence, capital outflow from risk assets such as bitcoin."

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