The Federal Reserve’s announcement of a quarter percentage point interest rate increase has had a significant impact on the cryptocurrency market, causing Bitcoin to slide towards $25,000.
Bitcoin fell almost 7% to $26,760 (from recent high of $28,755), before recovering to $27,365. At the time of writing Ether was down 2.79% in the last 24 hours, according to CoinMarketCap data.
At the end of its latest policy meeting today, the Federal Reserve increased the interest rate by a quarter percentage point, citing concerns about the recent banking crisis and indicating that further hikes may be limited. According to Fed projections, only one more hike is expected this year.
The Fed’s decision aims to curb rising inflation by making borrowing more expensive, which could lead to a slowdown in the economy and reduce demand for cryptocurrencies.
Investors are concerned about the implications of the decision on the cryptocurrency market, as higher interest rates could make borrowing more expensive, leading to a reduction in demand for cryptocurrencies.
Although blockchain technology has numerous applications and is being adopted by businesses and governments around the world, the recent interest rate hike is a signal that inflation is a concern, and this could lead to a slowdown in the economy.
Moreover, regulatory concerns have also led to uncertainty among investors, with governments grappling with how to regulate cryptocurrencies, which has led to increased scrutiny of cryptocurrency exchanges and other related businesses.
Several factors have contributed to the current situation in the cryptocurrency market, including the recent banking crisis, inflation, and regulatory concerns.
Investors should diversify their portfolios to include both cryptocurrencies and other asset classes to mitigate risks. They should also stay informed of the latest developments in the cryptocurrency market and the broader financial markets to make informed investment decisions. Additionally, investors should consider the long-term outlook and their investment horizon and risk tolerance before making any investment decisions.