Bitcoin Tumbles Below $57,000 Ahead of FOMC Decision

BySamson Ononeme

May 1, 2024 ,
The price of bitcoin tumbled below $57,000 ahead of the FOMC decision, with crypto markets on edge over the Fed's guidance on rates.

Key Insights

  • Bitcoin’s price dropped over 10% ahead of the upcoming Federal Reserve policy decision, falling below $57,000.
  • Traders are bracing for potential volatility in crypto markets stemming from concerns the Fed could signal keeping rates higher for longer.
  • Bitcoin and other cryptocurrencies have proven sensitive to U.S. monetary policy shifts, with tokens suffering losses as the Fed raised rates.

LONDON (MarketsXplora) – The price of bitcoin fell sharply on Wednesday ahead of the U.S. Federal Reserve’s latest policy decision, as traders braced for potential volatility in risk assets stemming from the pivotal announcement.

The world’s largest cryptocurrency dropped over 10% in the last 24 hours to trade around $57,925 as of 1320 GMT, down from over $64,000 earlier this week. Bitcoin has been trending lower since hitting an all-time high above $73,000 in March.

Broader crypto markets were also in the red, with ether and other major tokens posting hefty losses.

The sell-off in bitcoin coincided with traders fretting over the Federal Open Market Committee’s (FOMC) rate decision due at 1800 GMT, and subsequent comments from Fed Chair Jerome Powell kicking off a press conference 30 minutes later.

Read also! Bitcoin Could Retest $50,000: Standard Chartered

According to analysts, traders were positioning for a potentially substantial market move over concerns the central bank could signal keeping interest rates higher for longer to quell stubbornly high inflation.

The price of bitcoin tumbled below $57,000 ahead of the FOMC decision. Source: Coinmarketcap

While the Fed is widely expected to leave rates unchanged at this meeting, traders hope for clues on when rates may be cut again after over a year of monetary policy tightening crushed risk appetite.

“The crypto market tends to react strongly to FOMC decisions,” said Stephen Ethan, market analyst at MarketsXplora. “We often see large volatility in the initial minutes after the announcement before bitcoin stabilizes.”

The bearish price action in bitcoin ahead of the Fed decision suggested traders were bracing for turbulence, he added.

Samson Ononeme

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