In a surprising turn of events, Bitcoin, the world’s leading cryptocurrency, witnessed a sharp decline, dipping below the $25,000 threshold for the first time since March 17. This rapid descent occurred on June 15, as Bitcoin experienced a 4% plunge in just half an hour, tumbling from $25,867 to $24,819. At the time of reporting, Bitcoin is treading cautiously, hovering slightly above the $24,985 mark.
Despite recent turbulence in the crypto market and legal battles between major cryptocurrency exchanges, Coinbase and Binance, Bitcoin managed to maintain its ground at the $26,000 level for the past week. Notably, Binance saw over $780 million in customer withdrawals in a mere 24-hour period.
This sudden drop in Bitcoin’s value coincided with an announcement from the Federal Reserve, indicating a pause in interest rate hikes. This decision comes after nearly 15 months of continuous rate increases aimed at combatting inflation. Federal Reserve Chairman Jerome Powell emphasized that this pause is temporary, signaling potential long-term challenges for Bitcoin.
According to Josh Gilbert, a market analyst at eToro, the positive response of risk assets throughout the year hinged on the expectation of declining inflation and peaking interest rates. However, Gilbert believes that this latest development could disrupt this trend, possibly impacting Bitcoin in the process.
The broader cryptocurrency market also felt the repercussions of Bitcoin’s decline. Ethereum, the second-largest digital currency by market capitalization, suffered a substantial 5% drop, falling from $1,727 to $1,631 within the same timeframe. Altcoins, too, were not immune to the bearish sentiment. Several tokens, categorized as securities in the ongoing SEC lawsuit, experienced a 3% decline. Cardano’s value fell by 3.4% in the past 24 hours, while Polygon and Solana registered drops of 3.3% and 2.8%, respectively.
Marcel Pechmann, an analyst at Cointelegraph, suggests that Bitcoin’s options data implies the potential for further declines. This pessimistic outlook arises from a combination of factors, including regulatory hostility towards the crypto industry within the U.S. and the likelihood of additional rate hikes by the Federal Reserve in the upcoming months.
As the cryptocurrency market grapples with increased volatility and regulatory scrutiny, Bitcoin’s performance in the coming weeks will be closely monitored, offering insights into the resilience of the digital currency in the face of evolving economic factors.