- Interest rates remained unchanged at 5.25%-5.50%.
- This further worked against Bitcoin (BTC), which has been on a downward spiral since the halving.
No Change in Interest Rates
The US Federal Reserve announced on Tuesday that interest rates will remain at 5.25%-5.50%, which came as no surprise to everyone. The writing was on the wall that the much-anticipated reprieve in borrowing costs was still a remote possibility when the latest inflation data came out and based on the speeches of Central Bank Chair Jerome Powell.
In April, the Consumer Price Index (CPI) report of the Bureau of Labor and Statistics covering March showed a 3.8% increase in core inflation (excluding the volatile prices of food and energy) and a 3.5% increase in headline inflation (including food and energy costs). The total inflation numbers were significantly higher than January’s 3.1% and February’s 3.2% figures.
Powell has time and again persisted that interest rate cuts will only be considered if they have “greater confidence that inflation is moving sustainably toward 2%.” As the previous data displayed no signs of moving closer to the Fed’s target, it’s all status quo for now.
Nevertheless, the central bank promised that it “will carefully assess incoming data, the evolving outlook, and the balance of risks” if it ever considers re-configuring the perimeters for the rate adjustments. With the US Presidential election nearing, some analysts expect the government to gamble with several rate cuts to appease the people and businesses.
Is the Party Over for Bitcoin?
Bitcoin has been losing value since the fallout of the halving sell-offs, bringing down the entire cryptocurrency market with it. This was even evident in the spot Bitcoin exchange-traded fund (ETF) segment of the US market as outflows reigned, which eventually broke BlackRock’s streak of inflows. The slumping prices were likewise partly blamed for the lukewarm performance of the newly launched spot Bitcoin and Ethereum (ETH) ETFs in Hong Kong.
As of this writing at 11:00 AM UTC on Wednesday, Bitcoin is trading at $57,800 with a 0.25% recovery in the 24-hour charts. Despite that, it remains around 8% and 12% down in the seven-day and one-month frames, respectively.
According to Grayscale Investments Head of Research Zach Pandl, the prevailing interest rates likely worked in support of the US dollar and weighted heavily on Bitcoin. However, the odds may shift in the latter’s favor if optimism in interest rate cuts will be fueled.
SchiffGold CEO Peter Schiff, of course, saw this as a time to take potshots at the digital gold. For Bitcoin’s resident shill, “the party is over” as the bulls have lost their footing.
“It’s down 23% in dollars, but 33% priced in gold, with one Bitcoin now worth fewer than 25 ounces,” said Schiff’s post on X. “Turn out the lights #HODLers, the party is over.”
The veteran investor and analyst then went on to display a chart indicating Bitcoin’s price movements dropping out from a bullish pennant, which could signal a shift of control to the bears.