Bitcoin the flagship crypto asset dropped below its psychological barrier of $100,000 following Fed cut rates announced by the Federal Open Market Committee yesterday.
Bitcoin will be falling below the $100,000 price level for the first time since the first week of December after breaching the $100,000 price level for the first time within the same period.
The Total market capitalization of all crypto assets dropped by 4.7% following the Fed cut rates announcement as Bitcoin the flagship asset dropped below $100,000
At the time of the report, Bitcoin has slightly recovered to $101,652 gaining nearly $2000 from the $100,000 mark.
FED cut rates
The FOMC chairman Jerome Powell yesterday announced the new data on the Federal cut rate. The Committee has decided to cut the Federal Fund rates by a 25-basis point.
- The new target range of 4.25%-4.50% met expectations, following which investors moved away from risk-on assets like cryptocurrencies and US equities.
- Besides cutting the Federal Fund rates, chairman Jerome Powell made some comments that were quite bearish for the crypto industry.
- He stated that the Central bank cannot hold Bitcoin and is not seeking any legislative change on the matter.
Regarding the legal complexities of holding bitcoin, Powell clarified “That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.”
Powell’s statement fuels Uncertainty over US Bitcoin reserve
The FOMC chairman’s comment on the Central Bank not being able to hold Bitcoin has cast shadows on Donald Trump’s promise to setup a strategic Bitcoin reserve for the country when he assumes office.
- Donald Trump recently confirmed that he plans on setting up a Bitcoin reserve for the United States and making sure the US remains in the driving seat of the global cryptocurrency industry.
- The statement made by Jerome Powell yesterday has cast doubts on that happening without a lot of internal resistance from Government bureaucrats.
- The statement by the FOMC chairman led to a drop in crypto assets in the market yesterday.
Bitcoin last fell below $100,000 a day after crossing $108,000 for the first time this year. Ether fell 4.5% to $3,665, while XRP slid 6.8% to $2.35.
What to Know
- Bitcoin currently has gained slightly to $101,652 dropping by 2.2% in the last 24 hours. The crypto asset is currently down by 5.9% from its all-time high of $108,135.
- FOMC data on rate cuts always affect the price of crypto assets because faster rate cuts by the Fed would inject more liquidity into the financial system, potentially boosting cryptocurrency prices and global interest in the market.