The Federal Open Market Committee (FOMC) convened its fourth policy meeting of the year on June 12 and opted to maintain interest rates at a range of 5.25% to 5.5%.
The unforeseen resolution resulted in substantial upheaval in the cryptocurrency market, precipitating steep falls in the value of Bitcoin and Ethereum. The price of Bitcoin sharply declined from $70,000 to $66,000, while Ethereum also saw a comparable drop, leading to liquidations amounting to roughly $400 million.
Federal Reserve Chair Jerome Powell highlighted the advancements in combating inflation, but maintained a prudent stance, suggesting that significant headway has been achieved, however it is not yet appropriate to ease monetary policy.
The cryptocurrency market underwent a rapid and significant impact, as Bitcoin plummeted from $70,500 to $67,220, Ethereum declined from nearly $3,700 to $3,400, and alternative cryptocurrencies such as Cardano, Solana, and Ripple also witnessed drops of at least 8%.
Over the past two days, almost $400 million worth of cryptocurrency assets were sold off, indicating significant volatility in the market. US spot Bitcoin exchange-traded funds (ETFs) had a reduction in funds of $200 million, putting an end to a consecutive period of 19 days with an increase in funds.
While the United States maintains a steadfast stance against implementing rate reduction prematurely, other regions such as the European Union and Canada are adopting other strategies by choosing to implement rate cuts within this year.
A survey conducted by Grayscale found that 41% of voters are showing greater interest in Bitcoin as a result of ongoing inflation. This underscores the growing scrutiny of conventional economic policies and the quest for alternative investment options in an atmosphere characterized by high inflation.
In May, there was an increase in the purchase activity of the US spot Bitcoin Exchange Traded Funds (ETFs). This comes after US Securities and Exchange Commission (SEC) approved eleven ETFs, which collectively acquired 25,729 Bitcoin valued at $1.83 billion.
