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Bitcoin and Other Cryptocurrencies Face Slight Decline Following Federal Reserve Decision
Editor
Published Sep 21, 2023 02:11PM ET
© Reuters.
Cryptocurrencies, including Bitcoin, experienced a marginal drop on Thursday, following the Federal Reserve's recent decision to keep interest rates unchanged while hinting at potential future increases. Bitcoin, the leading digital currency, saw a 1% decrease in price in the last 24 hours, settling around $26,850, after peaking at nearly $27,300 on Wednesday.
The return of Bitcoin to roughly $26,000 continues the trend of stagnant activity seen over the past month. This period of low volatility and reduced trading volumes has led to a lull in cryptocurrency markets. The market is expected to continue this trend of gradual accumulation, with quick buy-ups following price dips and short-lived rallies.
This response in crypto markets mirrors that of traditional stock markets such as the Dow Jones Industrial Average and S&P 500 following the Federal Reserve's decision. Despite the largely anticipated decision to hold off on rate hikes leading to a subdued response, future rate prospects will continue to influence Bitcoin. Higher returns on risk-free cash or Treasuries may reduce investor incentive to opt for riskier options such as cryptocurrencies.
Analysts suggest that investors should prepare for more of the same subdued activity from Bitcoin that has characterized the crypto market since early summer. The next monetary policy decision from the Federal Reserve is not expected until November.
Potential catalysts for major market upswings could include approval of proposed spot Bitcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission or changes in Bitcoin issuance due to next year's halving event, which could impact supply and demand dynamics.
Alongside Bitcoin, other cryptocurrencies also saw declines. Ether, the second-largest cryptocurrency, fell by 1.5% to $1,610. Smaller tokens known as altcoins weakened too, with Cardano and Polygon both experiencing a 2% drop. Memecoins followed suit, with Dogecoin and Shiba Inu each losing 1% of their value.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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