Bitcoin Slips A Little. Before Another Rally, Cryptocurrency Traders Pause

March 23, 2023

minute read

After a selloff on Wednesday in response to the Federal Reserve's most recent interest rate hike, BitcoinBTCUSD +1.33% and other cryptocurrency were down on Thursday. The boom in digital assets is expected to continue, but cryptocurrency traders currently envisage a slowdown.

‍

The price of Bitcoin dropped from Wednesday peaks above $28,500 to $27,700 in the last 24 hours, a 1.5% decline, but it recovered from the low of $27,000 just after the Fed increased interest rate by a quarter of a percent point. With prices for the biggest online asset still up by more over two-thirds in 2023 in a surge that has sparked calls of a new bull market, Wednesday's milestone marked the highest possible level for Bitcoin since the cryptocurrency bear market escalated last June.

‍

According to Sam Yilmaz, co-founder of venture firm Bloccelerate, "Bitcoin's rise before of the Fed set us to be disappointed, and sure enough we witnessed Bitcoin decline from just shy of $29,000 after Powell's press conference. "A cooling off period is due and enables Bitcoin and crypto to settle... I still believe Bitcoin may go to $35,000 in a couple of weeks because, simply put, price movement breeds price action in crypto," the author writes.

‍

Once the Fed raised interest rates, cryptocurrencies plummeted in step with the stock market, resuming Bitcoin's link with stocks after weeks of earnings growth. While the 25 basis point rate increase was already factored in, investors' concerns about the continued strain that tightening financial conditions will put on the banking sector caused digital assets to decline along with the Dow Jones Industrial Average and S&P 500.

‍

The second-largest cryptocurrency after Bitcoin, EtherETHUSD +1.14%, dropped 2% to $1,750 but was still higher than late-Wednesday lows. Cardano was up 1% and Polygon was down 1% in the smaller cryptos or altcoins, which were more mixed. Memecoins were marginally less strong, with Shiba Inu and Dogecoin both falling by less than 1%.