Bitcoin price remained stable on Thursday amidst a volatile session, mainly due to the Federal Reserve’s forecast of high interest rates for a longer duration. Despite signs pointing towards a cooling near-term inflation, the world’s biggest cryptocurrency experienced minimal movement, rising only by 0.4% in the past 24 hours.
The Federal Reserve’s announcement of the possibility of only one rate cut this year, as opposed to previous expectations of three cuts, had a significant impact on the sentiment around Bitcoin and other cryptocurrencies. The Fed’s decision to keep rates unchanged, along with the acknowledgment that more progress was necessary to curb inflation, created uncertainty in the crypto market.
Following a slight easing of U.S. consumer inflation in May, Bitcoin initially saw some gains. However, the overall market sentiment quickly shifted after the Fed’s comments, highlighting the negative impact of high interest rates on speculative assets like cryptocurrencies. Speculative investors were cautious due to the limited liquidity available for investing in the sector.
The focus is currently on the producer price index inflation data for further insights into U.S. inflation trends. The expectation of high interest rates for an extended period also weighed on the broader cryptocurrency market, as evidenced by the 0.3% drop in the price of Ether. Other tokens like ADA, XRP, SOL, SHIB, and DOGE experienced mixed movement, with some gaining while others losing value.
Overall, the Federal Reserve’s forecast of high interest rates has posed challenges for the cryptocurrency market, affecting investor sentiment and leading to fluctuations in prices. As market participants await further inflation data, the stability of Bitcoin and other cryptocurrencies remains uncertain in the face of evolving economic conditions.