Bitcoin’s price swiftly dropped below $64K after the U.S. Fed adopted a more hawkish stance.
Following a period of relative calm, the flagship cryptocurrency experienced sharp volatility, plunging by over $3.5K to $63.3K on Binance.
The U.S. Fed announced that interest rates would remain at 5.25%–5.5%. This revelation caused a slight decline in Bitcoin and the broader cryptocurrency market. However, as Q3 draws to a close, many market participants anticipate that the Fed may lower rates.
In the last 24 hours, 66,186 traders were liquidated, resulting in a total liquidation value of $224.40 million. The largest single liquidation order, worth $4 million, was placed on OKX in the ETH-USD swap.
Despite a promising start to the week, where bulls pushed Bitcoin’s price to its highest level since early June at $70K, the market soon turned.
Hawkish U.S. Fed Changes Bitcoin Narrative
Bitcoin’s attempt to break through the $65.5K support level met with limited success and was quickly reversed. The retracement sent prices sharply lower, with Bitcoin falling below $63.3K.
Price action showed a brief recovery yesterday, with Bitcoin staying relatively stable at $66.8K. However, in the last few hours, bears regained control, driving the price to a two-week low of $63.3K.
The U.S. Federal Reserve maintained its benchmark fed funds rate range of 5.25%–5.50%, as the market had projected. Surprisingly, the Fed offered no indication that a rate cut in September is guaranteed.
In its policy statement, the Federal Reserve noted that “inflation has eased over the past year but remains somewhat elevated.” The statement also emphasized that “the economic outlook is uncertain, and the [FOMC] is attentive to the risks to both sides of its dual mandate.”
Fed Chair Jerome Powell stated at yesterday’s press conference that new data has increased confidence that inflation is returning to the 2% target. He mentioned that while no decisions have been made for September, the “broad sense is that we’re moving closer” to lowering rates.
Potential interest rate decreases by the Federal Reserve later this year could be beneficial for riskier assets like Bitcoin. Historically, lower interest rates have supported Bitcoin, as investors tend to seek higher-yielding financial assets.
Positive sentiment surrounding Bitcoin has been reinforced by the possibility of a more relaxed monetary policy, despite the uncertain economic landscape.
Consequently, if Bitcoin falls below the psychological $60K barrier, investors—particularly short-term holders—may consider selling their tokens. Such levels could potentially trigger a significant market-wide bounce. According to Santiment, “aggressive whale accumulation and increased crowd negativity would be the ideal recipe” for such a scenario.
As the American elections approach, Bitcoin is also gaining attention in the political arena. Following their speeches at the Bitcoin 2024 conference, former U.S. President Donald Trump and a Republican presidential candidate marketed limited-edition sneakers with a Bitcoin motif on social media. Trump announced the launch of the BTC gold sneakers, which sold out in less than three hours.
In the meantime, Trump pledged to remove SEC Chair Gary Gensler and establish a “strategic Bitcoin reserve” during his speech at the conference. He has also been linked to selling NFT collections and receiving substantial cryptocurrency donations.
Market observers are closely watching Bitcoin’s ability to break through the psychological resistance level of $70,000 as it continues to rise. If Bitcoin maintains trading above this level, it could signal a fresh wave of positive momentum and attract more capital to the cryptocurrency market.
