Bitcoin Holds Steady as Federal Reserve Keeps Interest Rates Unchanged
Bitcoin’s price remained relatively steady on Wednesday after the U.S. Federal Reserve decided to keep interest rates at their current level. The Federal Open Market Committee (FOMC) held the benchmark federal funds rate between 5.25% and 5.50%, marking the first rate pause of 2024.
The central bank stated that it would maintain the target range for the federal funds rate in support of its goals. The FOMC also expressed uncertainty about the economic outlook and remained attentive to inflation risks. Despite job gains and a low unemployment rate, inflation remains elevated.
Economic Outlook Remains Uncertain
The FOMC acknowledged that the economic outlook is uncertain and highlighted its vigilance against inflation risks. While job gains have been strong and the unemployment rate has remained low, inflation has eased over the past year but remains elevated.
The committee aims to achieve maximum employment and a 2% inflation rate in the long run. It believes that the risks to achieving these goals are moving into better balance.
According to market expectations, there may be at least one rate cut by the July 31 FOMC meeting, with rates potentially being 50 to 100 basis points lower by the end of 2024.
Bitcoin’s Price Reaction
Despite the Fed’s decision to hold interest rates steady, Bitcoin experienced a modest increase of 0.4% over the past 24 hours, reaching $64,564 at 2:16 p.m. ET.
Zach Pandl, Managing Director of Research at Grayscale, believes that bitcoin’s price could benefit from upcoming conditions such as potential rate cuts and a contentious presidential election. He views these factors as a supportive macro backdrop for bitcoin.
Ruslan Lienkha, Chief of Markets at YouHodler, anticipates a long-term upward trend for bitcoin. He suggests that the recent correction in price is merely a temporary pause before the next price hike to a new all-time high. Lienkha advises long-term investors to accumulate positions during this consolidation phase.
Hot Take: Bitcoin Holds Strong Amidst Uncertain Economic Climate
Bitcoin’s resilience in the face of an uncertain economic outlook and the Federal Reserve’s decision to maintain interest rates reflects its growing status as a safe haven asset. Despite potential risks and uncertainties, investors continue to see value in bitcoin as an alternative investment.
The upcoming rate cuts, along with other macroeconomic factors, could further support bitcoin’s price in the long run. As the global economy navigates through these uncertain times, bitcoin remains an attractive option for investors seeking stability and potential returns.
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