In a startling turn of events, Bitcoin, the world’s leading cryptocurrency, has seen its value dip below the $25,000 threshold for the first time in three months. This descent, which took place on June 15, saw Bitcoin’s price plummet by 4% in just 30 minutes, dropping from $25,867 to $24,819. At the time of this report, Bitcoin was teetering just above $24,985.
Despite the recent lawsuit proceedings initiated by the U.S. Securities and Exchange Commission (SEC) against major cryptocurrency exchanges Coinbase and Binance, Bitcoin had managed to maintain a relatively steady valuation of around $26,000 over the preceding week. Remarkably, more than $780 million was withdrawn from Binance within a mere 24-hour period, underscoring the apprehensive climate in the crypto market.
This precipitous drop in Bitcoin’s price unfolded merely three hours following the Federal Reserve’s announcement of a pause in interest rate hikes. This decision came after nearly 15 consecutive months of rate increases, implemented to combat inflationary pressures.
Federal Reserve Chairman Jerome Powell conveyed the temporary nature of this pause, signaling potential long-term repercussions for Bitcoin. Josh Gilbert, a market analyst at eToro, pointed out that this positive reaction in risk assets throughout the year was largely based on the expectation that inflation would decline and interest rates would peak, eventually initiating a decline. Powell’s message suggests a different trajectory, which could pose challenges for Bitcoin.
“The positive reaction of risk assets that we’ve seen this year is based on the expectation that inflation will fall and interest rates will peak and then start to fall,” Gilbert explained.
Bitcoin’s slump resonated across the broader cryptocurrency market. Ethereum, the second-largest digital currency by market capitalization, witnessed a decline of over 5%, falling from $1,727 to $1,631 within the same timeframe. Altcoins, including those implicated as securities in the SEC’s lawsuit, were not immune to the prevailing bearish sentiment. Cardano, for instance, suffered a 3.4% drop in the past 24 hours, while Polygon and Solana registered declines of 3.3% and 2.8%, respectively.
Analyzing current Bitcoin options data, Marcel Pechmann, a Cointelegraph analyst, suggested that further declines may be on the horizon. He pointed to the regulatory hostility faced by the crypto industry in the United States, coupled with the possibility of additional rate hikes by the Federal Reserve in the coming months, as factors contributing to this pessimistic outlook.
As Bitcoin’s price navigates choppy waters, market participants worldwide will be closely monitoring the evolving landscape, with regulatory decisions and macroeconomic factors poised to play pivotal roles in shaping the cryptocurrency’s future trajectory.
