Bitcoin
and other cryptocurrencies slipped Thursday as risk-sensitive assets weakened after the Federal Reserve’s latest monetary policy decision. Cryptos are poised to return to range-bound trading that has defined recent months.
The price of Bitcoin has retreated 1% over the past 24 hours to around $26,850, moving lower from a Wednesday peak near $27,300 after the Fed kept interest rates unchanged but signaled that borrowing costs likely are to be increased again. The largest digital asset thus returns to the zone around $26,000 that has defined a period of stagnant activity for more than a month, with historically low volatility and trading volumes contributing to a lull in crypto markets.
“I expect yet more sideways action for Bitcoin and the rest of the market,” said Markus Levin, co-founder of the blockchain network XYO. “We’ll likely continue to see a gradual accumulation, with dips being bought up and rallies being short-lived.”
Cryptos, like the stock market’s
Dow Jones Industrial Average
and
S&P 500,
reacted to the Fed’s latest move, though action was somewhat muted as the decision to pause on rate hikes largely was expected. While the outlook for rates will continue to be influential for Bitcoin—higher returns on risk-free cash or Treasuries gives fewer incentives for investors to buy riskier bets like cryptos—the Fed’s next monetary policy decision won’t come until November.
Until then, investors should brace for more of the same boring Bitcoin action that has defined the crypto market since the early summer.
“I don’t think we’re in for any major upswings for the broader digital asset market until we get some sort of new catalyst,” said Levin. “Such a catalyst could consist of one or more of these proposed spot Bitcoin ETFs getting approved or, further down the line, next year’s Bitcoin halving,” Levin added, referring to crypto exchange-traded funds under consideration by the Securities and Exchange Commission), and the so-called halving next year which will change the pace of Bitcoin issuance, impacting supply and demand dynamics.
Beyond Bitcoin,
Ether
—the second-largest crypto—fell 1.5% to $1,610. Smaller tokens or altcoins were also weak, with
Cardano
down 2% and
Polygon
slipping 2%. Memecoins exhibited more of the same, with
Dogecoin
dropping 1% and
Shiba Inu
shedding 1%.
Write to Jack Denton at jack.denton@barrons.com
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