Bitcoin experienced a dip to $42,300, accompanied by a decline in major cryptocurrencies like Ethereum (ETH), Cardano’s ADA, Polkadot’s DOT, and Solana’s SOL, following remarks from Federal Reserve Chair Jerome Powell suggesting a possible delay in a March interest rate cut.
During Wednesday’s Federal Open Market Committee (FOMC) press conference, Powell’s comments tempered market expectations of an imminent rate cut, leading to a swift downturn in risk assets, including cryptocurrencies. The Fed opted to maintain its benchmark fed funds rate range at 5.25%-5.5%, deferring any immediate rate adjustments.
Powell’s statement regarding the unlikelihood of a rate cut in March caused Bitcoin to drop from its daily high of $43,700 to $42,300, marking a 2.3% decrease over the past 24 hours. Concurrently, the CoinDesk 20 (CD20) index, representing a broad spectrum of the crypto market, experienced nearly a 3% decline.
Other major cryptocurrencies also registered losses, with Ethereum, Cardano’s ADA, Avalanche’s AVAX, and Polkadot’s DOT declining by 3%-4%, while Solana’s SOL saw a substantial decrease of over 6%, dropping below $100.
In traditional markets, the Nasdaq and the S&P 500 exhibited declines of 2.2% and 1.6%, respectively, signaling broader market reactions to Powell’s comments.
Market analysts, such as Alex Krüger from Asgard Markets, suggested that the market had preemptively priced in rate cuts, projecting a more realistic timeline of rate reductions starting in May or June rather than March.
The probability of a March rate cut, as indicated by the CME FedWatch Tool, decreased to 34.5% following Powell’s remarks, down from approximately 65% prior to the conference.
Ruslan Lienkha, Chief of Markets at YouHodler, noted that any indication of a prolonged period of high rates could prompt corrections in the stock market, potentially leading to capital outflows from risk assets like Bitcoin.
Despite the downturn, analysts at Swissblock observed that Bitcoin appears to be consolidating within the $44,000 to $42,000 range, suggesting a temporary lack of clear direction. They identified the $42,000 and $40,000 levels as potential key support zones where buyers might intervene, potentially limiting further downside for Bitcoin’s price.
