Bitcoin drops on FOMC statement and press conference

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Early Thursday, the cryptocurrency market displayed mixed reactions following the Federal Reserve's announcement, which diminished hopes for interest-rate cuts. Bitcoin notably dropped after the FOMC released its rate statement and during Fed Chair Powell's press conference. Prior to this, Bitcoin had briefly climbed above $69,000, spurred by unexpectedly mild U.S. consumer inflation data, but these gains were subsequently erased.

The downturn in Bitcoin occurred as Federal Reserve officials projected only one interest-rate cut for this year. Like other high-risk assets, cryptocurrencies tend to behave in an inverse fashion to yields. As such, higher bond yields are acting as a headwind, as market expectations for Federal Reserve rate cuts are scaled back.

Ether, the second-largest cryptocurrency, also declined, although it has appreciated by 19% over the past month. Recently, the Securities and Exchange Commission approved crucial rule changes to permit the trading of spot Ether exchange-traded funds. However, final approval for the launch of these products could still take several weeks or months.

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Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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