Bitcoin went into free-fall this morning, dropping 5.2% after market open to $84,500. The move follows the Federal Reserve’s decision Wednesday to keep the federal funds rate at 3.50%–3.75%, ending a three-month streak of interest rate cuts.
The Federal Open Market Committee voted 10–2 to keep rates steady. Policy makers said that the “economy [is] expanding at a solid pace,” citing this as the primary driver for the decision. Inflation remains persistent, though it is moderating, according to the committee statement.
Chairman Jerome Powell signaled a cautious approach regarding future policy adjustments. Powell offered no guidance suggesting a return to rapid easing. The lack of dovish commentary disappointed investors who had expected easing conditions for liquidity.
Bitcoin held support between $89,000 and $90,000 prior to the Federal Reserve’s rate decision. Bitcoin dipped below $90,000 immediately after the central bank confirmed the pause before selling off more severely in early trading hours on Thursday. At the time of publication, bitcoin is trading at $85,600.
Other assets weren’t spared, either. Gold and silver both had their historic runs interrupted with precipitous selloffs of their own, as did the S&P 500, Nasdaq, and Dow Jones.
Investors are shifting focus to a higher-for-longer rate environment. The market largely priced in the pause, but the confirmation dampened speculative fervor. Future rate moves are now likely delayed as the central bank monitors economic data.
Emerging risks regarding U.S. fiscal stability are weighing on risk sentiment, as concerns over a potential government shutdown have entered the market narrative.
Header image by the Federal Reserve via public domain.
