Bitcoin Dips Below $42k as Federal Reserve Holds Rates Steady

TL;DR

• Bitcoin has lost nearly 2% of its value to dip below the $42k level.

• The poor performance comes after the United States Federal Reserve held interest rates at the current range of 5.25%-5.50%.

Fed Leaves Interest Rates Unchanged

The cryptocurrency market has resumed its bearish trend after a positive start to the week. Bitcoin, the world’s leading digital currency by market cap, has lost nearly 2% of its value over the last 24 hours and is now trading below the $42k level.

The poor performance comes after the US Federal Reserve held interest rates at the current range of 5.25%-5.50%, as expected. The move marks the first rate pause of 2024.

In a statement on Wednesday, the Fed said,

"The Committee decided to maintain the target range for the federal funds rate at 5.25% to 5.50%. Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated."

The move saw Bitcoin decline to a weekly low of $41,893, down by roughly 2% over the last 24 hours. The Federal Reserve is expected to cut interest rates in the future. However, the apex bank said, 

"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%."

Bitcoin’s poor performance also impacted the broader cryptocurrency market. Ether, the second-largest cryptocurrency by market cap, is down by more than 3% in the last 24 hours and is now trading at $2,251 per coin.

Solana (SOL) and Avalanche (AVAX) are the worst performers amongst the top 10 cryptocurrencies by market cap, losing more than 6% of their values over the last few hours. 

With Bitcoin underperforming, the total cryptocurrency market cap has declined to $1.51 trillion, down by 8%.