U.Today, the largest cryptocurrency by market capitalization, fell to an intraday low of $58,528 on Monday, the steepest decline since mid-April, as continued pessimism about the number of interest rate cuts weighed on crypto sentiment.
The decline in cryptocurrency prices earlier this week was driven by doubts about the Federal Reserve’s scope to quickly cut interest rates from their highest levels in two decades.
Given the current market environment, Federal Reserve officials recently issued key comments that are expected to have significant implications for cryptocurrencies.
Federal Reserve Governor Michelle Bowman said on Tuesday that it was not yet the right time to start cutting interest rates, dampening hopes for U.S. interest rate cuts. She also stated that if inflation does not fall, she will consider increasing interest rates.
The remarks reflect the prevailing mood at the central bank, with most policymakers saying in recent weeks that while they still expect inflation to return to the Fed’s 2% target, they need more evidence.
The S&P 500 erased gains after comments from Fed Governor Michelle Bowman.
Here’s how the cryptocurrency market reacted
However, Bitcoin and cryptocurrencies posted a muted response, barely unaffected. Bitcoin rebounded above $62,000 on Tuesday, hitting a high of $62,400.
Cryptocurrencies also rose broadly, with a handful of cryptoassets in the green at the time of going to press. The frog-themed cryptocurrency Pepe was trading higher by 9%, while Dogwifhat (WIF) was also up 7.30%. Notcoin (NOT) rose 13% in the same time frame.
While Bitcoin is trading slightly lower, there has been little movement over the past 24 hours, rising 0.97% to trade at $61,595 at press time.
Bitcoin peaked in March at $73,798, but has lagged behind customary 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 price support zone in case of further declines.
In the coming days, investors and market participants will continue to closely monitor the Fed’s policy decisions and their consequences for cryptocurrencies.
