Following the Fed interest rate pause announcement, the price of BTC broke major price support, raising concerns about a continued decline.
The Federal Reserve announced on Wednesday that it would maintain its interest rate at 5.25%, marking the first time since January 2022 that the rate would remain unchanged. According to the Fed, the inflation rate appears to be decreasing, and it wants to see whether previous rate increases were sufficient to slow price increases. However, it was hinted that the rate could rise if inflation does not appear to be declining and remains a concern.
At a press conference, Fed Chairman, Jerome Powell, stated:
“As we get closer and closer to our destination (the peak rate), it’s reasonable and common sense to go a little slower.”
The unemployment rate report also revealed that the final figures were above expectations. The Fed had predicted that the unemployment rate would fall to 4.1% from 4.5%. Nonetheless, the actual result was even lower, dropping to 3.7%, implying that the labor market is performing better than the Fed expected. The lower unemployment rate suggests that the economy’s current state can withstand higher interest rates without causing significant job losses.
Even with the interest rate pause, there are speculations that the rates may be raised twice before the end of the year, depending on how the economy nears its 2% inflation target. Powell also agrees that there may be a case for interest rates to rise later in the year, but only gradually.
BTC Price Plunges Further Following the Fed Interest Rate Pause
The interest rate news and many of the announcements that followed were positive for the United States dollar, making it strong against many currencies. Notably, the price of Bitcoin broke a major support level, raising concerns about a continued price decline.
Since April 14, the price of BTC has been below $31,000. This price represents the highest point it has reached this year after a long bearish market that persisted through most of 2022. Yesterday’s announcement finally caused it to break the $25,700 support level after more than five weeks of consolidating between $28,000 and $25,700.
The price of Bitcoin is now heading towards major support at $24,300. If this support does not hold, it may continue to decline towards the zone around $22,000, where the next major support level lies.
Given that Bitcoin’s price greatly influences market sentiment towards cryptocurrencies, the prices of other cryptos may also continue to drop if the bearish trend persists. Ethereum, for example, has also broken the $1770 support level and is currently moving towards the $1600 support level. Considering the price direction of major cryptocurrencies, individuals anticipating a major bull run may need to exercise a little more patience.
Temitope is a writer with more than four years of experience writing across various niches. He has a special interest in the fintech and blockchain spaces and enjoy writing articles in those areas. He holds bachelor’s and master’s degrees in linguistics. When not writing, he trades forex and plays video games.
