15-6-2023 (LONDON) Ether and major altcoins experienced a significant decline in value, with Ether dropping over 3% to $1,650 shortly after the Federal Reserve announced the end of its prolonged period of interest rate increases. ADA, SOL, and Matic also suffered losses of more than 4% and 5% respectively. Bitcoin, unaffected by the central bank’s expected decision to halt interest rate hikes, fell to approximately $24,990 on Wednesday. The negative sentiment spilled over to other major cryptocurrencies, causing a late afternoon plunge.
The largest cryptocurrency, Bitcoin, has seen a 3.2% drop in the past 24 hours, reaching its lowest level since mid-March following the late afternoon dip. Over the past five days, Bitcoin has remained relatively stable around the $26,000 mark as investors weigh the implications of the Securities and Exchange Commission (SEC) lawsuits against crypto exchanges Binance and Coinbase, the Federal Reserve’s monetary policy signals, and other macroeconomic uncertainties.
“The Fed’s decision to keep rates unchanged was anticipated by the market given the macroeconomic situation,” noted Joe DiPasquale, CEO of BitBull Capital, in a note to CoinDesk. “The initial response has been a downward move, as the Fed’s pause is unlikely to be a long-term trend.”
DiPasquale added, “From a market perspective, as long as Bitcoin maintains its position around $25,000, we should continue to see consolidation.” Ether also experienced a decline, trading at $1,650, down 5.1% from the previous day, reaching a three-month low. Other major cryptocurrencies mentioned in the SEC actions, such as ADA (Cardano’s token), SOL (Solana’s native crypto), and MATIC (Polygon’s native crypto), all dropped in value, with ADA down over 5% and SOL and MATIC each declining by more than 3%. The CoinDesk Market Index, which reflects the overall performance of the crypto market, remained relatively stable. The CoinDesk Bitcoin and Ether Trend Indicators continued their downtrend positions, reflecting ongoing investor caution.
Despite the prevailing downtrend, there are some positive indicators. Valkyrie Investments highlighted a price pattern known as a “throwback” on Bitcoin’s daily chart, suggesting a potential rally towards $37,000. A throwback occurs when prices drop to a former breakout level or a previously resistant level that has now turned into support. After a breakout, prices typically rally for a few days before losing upward momentum and retracing to the breakout point. According to Thomas Bulkowski’s book “Visual Guide to Chart Patterns,” prices often surge after the completion of a throwback.
While equity indexes showed minimal gains, concerns about the temporary nature of the rate increase cessation persisted, particularly as the Fed focuses on curbing inflation to reach its long-standing 2.5% target. The tech-heavy Nasdaq Composite and S&P 500 saw marginal increases, while the Dow Jones Industrial Average declined by 0.7%. Despite the mixed sentiment, Markus Levin, co-founder of XYO Network, expressed optimism, stating that the global macro setup is undergoing a significant shift, with the rate-hike pause being a clear indication of this change. Levin believes that bitcoin and other digital assets have likely already hit their bottom and expects sideways price action with intermittent bouts of volatility in the coming months. He anticipates a potential rally when the Bitcoin halving takes place next year.
