DBT Bureau
Bengaluru, 5 May
The price of bitcoin is consolidating above $60,000 after the US Federal Reserve’s decision to maintain the status quo in the short-term borrowing rate.
After sliding towards $56,500 after the rate decision, the most popular cryptocurrency has bounced back above $60,000 as the US job data rekindled hopes of a rate cut by the US Federal Reserve in September rather than November.
Notably, the prices of cryptocurrencies are linked to the availability of liquidity in the market. More liquidity usually pushes the prices of various cryptocurrencies including bitcoin higher.
The liquidity situation in the American market has worsened since April, which pulled down the pricing of bitcoin. As higher real interest rates have supported the dollar, it has weighed on bitcoin over the last month.
The US Federal Reserve on May 1 maintained the status quo in its benchmark rate after an uptick in inflation. The central bank said that it would continue to watch incoming price data before taking any decision to cut interest rates.
Earlier, the US Fed indicated that it could cut interest rates three times in 2024. Most analysts were expecting the rate cut to start at May 1 meeting. However, higher inflation so far has prompted the central bank to hold rates for now.
“We are prepared to maintain the current target federal funds rate for as long as appropriate. Inflation is still too high, further progress in bringing it down is not assured, and the path forward is uncertain,” US Fed Chair, Jerome Powell has said adding that the rate cuts going forward would depend on the data.
Unless the interest rate cycle seems easing, the possibility of crypto assets going upward seems difficult as per analysts.
Many bitcoin investors are expecting a price recovery in the cryptocurrency towards the later part of the year but the price for now is likely to continue in a short trading range given macro and geopolitical uncertainties.
