Bitcoin prices dropped after the Federal Reserve executed its first interest rate cut since the onset of the Covid-19 pandemic, reducing borrowing rates by 50 basis points, or half a percentage point.
The U.S. central bank lowered the federal funds rate to a range of 4.75% to 5%, signaling escalating concerns over the U.S. economy’s health. This aggressive rate cut fueled volatility across multiple markets, including cryptocurrencies.
By 16:40 ET (20:40 GMT), Bitcoin traded flat at $60,189.00. Meanwhile, Ethereum (ETH/USD) declined by 1.1% to $2,138.87, and Polkadot (pDOTn/USD) dropped about 1.9%.
Cryptocurrency-related stocks also saw earlier gains evaporate. While shares of MicroStrategy Incorporated (NASDAQ: MSTR) rose 1.5% during the day, most bitcoin miners, including Marathon Digital Holdings Inc (NASDAQ: MARA) and Riot Platforms (NASDAQ: RIOT), as well as crypto exchange Coinbase Global Inc (NASDAQ: COIN), ended the session flat to slightly negative.
The rate cut was announced following the Fed’s two-day meeting, marking a shift after a year of aggressive monetary tightening to fight inflation. Ten out of 19 Fed officials supported at least another half-point rate cut during the last two meetings of 2024.
Historically, rate cuts have weakened the U.S. dollar and boosted risk assets like stocks. However, Bitcoin has struggled to sustain gains achieved earlier this year. After reaching highs of $65,000 in August, the cryptocurrency has hovered around the $60,000 mark in recent days.
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