The price of Bitcoin (BTC) has retreated to $26,000 U.S. on expectations that the U.S. Federal Reserve will again raise interest rates by the end of this year.
Risk assets such as cryptocurrencies are declining after Fed Chair Jerome Powell said that he anticipates one more rate hike by year’s end, and that interest rates are likely to stay higher for longer than previously expected to help tame inflation.
The U.S. central bank left its influential Fed Funds Rate at its current level of 5.25% to 5.50%, a 22-year high, at its latest policy meeting. But the hawkish comments from Powell sent both stocks and crypto lower.
Prior to the latest Fed decision and comments, Bitcoin’s price had breached $27,000 U.S., its highest level in a month.
Bitcoin had been trading above $30,000 U.S. this past spring as the broader stock market rallied.
Analysts now expect that the price of Bitcoin will remain range-bound and continue to trade around the $26,000 U.S. level that it has been at for much of the summer.
The largest cryptocurrency by market capitalization has stagnated at $26,000 U.S. as both volatility and trading volumes in the digital asset have slumped.
Ethereum (ETH), the second biggest cryptocurrency, declined 1.5% to $1,610 U.S. following the latest comments from Fed Chair Powell.
Stocks also retreated, with both the S&P 500 and Nasdaq indices falling more than 1% on news of Powell’s outlook for interest rates.
Despite the pullback, Bitcoin’s price is up 61% so far in 2023.
