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Bitcoin price falls after Fed signals just one rate cut this year

Brian McGleenon

13 June 2024 at 6:11 am·2-min read

Imagen de archivo. La gente se reúne en un mercado durante un encuentro entre usuarios de bitcóin en el cierre de Adopting Bitcoin, en la playa El Zonte, en Chiltiupán, El Salvador. 9 de noviembre de 2023. REUTERS/Jose Cabezas — Bitcoin has hit a multi-week low after the US Federal Reserve signalled there would be only one rate cut this year.

Bitcoin fell to a multi-week low following the US Federal Reserve's hawkish announcement at Wednesday's monetary policy meeting.

At this week's Federal Open Market Committee (FOMC) meeting, the Fed kept its key interest rate unchanged and indicated that it now expects to cut rates only once this year, a revision from the three quarter-point reductions projected in March.

Equity indices responded to the news by remaining buoyant. The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) closed sharply higher at the end of trading on Wednesday.

Read more: Crypto live prices

However, bitcoin (BTC-USD) retraced to its lowest level since 20 May, trading flat over the past day to change hands for $67,566 on Thursday, according to CoinGecko data.

US Federal Reserve keeps rates steady

As expected, the FOMC maintained its benchmark fed funds rate range at 5.25%-5.50% on Wednesday. However, its economic outlook now predicts just one 25 basis point rate cut this year.

"In recent months, there has been modest further progress toward the Committee's 2% inflation objective," the FOMC said.

The previous policy statement mentioned a "lack of progress" towards lower inflation.

Major crypto tokens follow bitcoin lower

Other crypto tokens, such as ether (ETH-USD) and solana (SOL-USD), decreased by 0.6% and 0.2% respectively, according to Coingecko data.

The US Securities and Exchange Commission's (SEC) approval of spot ether exchange-traded funds (ETFs) in May was expected to act as a catalyst for ether. However, the cryptocurrency has seen a lull as investors await an announcement of when spot ether ETFs will begin trading on US exchanges.

Exchange data shows that some traders are seeking greater gains further out on the risk curve within the memecoin subsector, where memecoins inspired by US presidential candidates have rallied.

Read more: What is a spot bitcoin ETF and why has it sparked a crypto rally?

Donald Trump-inspired memecoins, such as MAGA (Ticker: TRUMP) and Maga Hat (Ticker: MAGA), part of the PolitiFi memecoin subsector, have risen by 6% and 23%, respectively, in the past day.

A misspelt memecoin inspired by presidential candidate Robert F Kennedy Jnr, called Ruburt F Kenidy Jr (Ticker: KENIDY), also rallied 6%.

Watch: What London Stock Exchange debut of Bitcoin ETNs mean for Europe's crypto market

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