Bitcoin’s price is flat as Federal Reserve keeps interest rates unchanged

Bitcoin’s price was mostly flat on Wednesday after the Federal Reserve did what many analysts expected it to do and kept interest rates unchanged.

The world’s largest cryptocurrency by market capitalization was unchanged at $27,186 at 2:15 p.m. ET, according to CoinGecko.

“Recent indicators suggest that economic activity has been expanding at a solid pace,” the Federal Reserve said in a statement after the Federal Open Market Committee meeting. “Job gains have slowed in recent months but remain strong, and the unemployment rate has remained low. Inflation remains elevated.”

“The U.S. banking system is sound and resilient,” it continued. “Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.”

Risk appetite

YouHodler Chief of Markets Ruslan Lienkha thinks the rate pause is unlikely to ignite bullish sentiment for risk assets.

“Even with the same rate until the end of 2023, the yield of fixed income will continue to grow, which will exacerbate the situation for risk assets,” he told The Block. He added that the current 5.5% target rate is not completely priced in yet, and that the current rate will affect markets for at least several months.

Analysts are optimistic the Federal Reserve will maintain its key rate in the range of 5.25%-5.50% until the end of the year.

“There will be roughly 75 basis points of interest rate cuts in 2024 as the Fed becomes increasingly dovish,” CoinShares Head of Research James Butterfill told The Block.

According to Enclave Markets CEO David Wells, affirmations that the rate hike cycle could be ending is a positive signal for markets.

“Introducing certainty into the markets with a rate pause is likely a positive signal for overall sentiment and likely will increase appetite for risk assets in the near term,” he told The Block.

CoinShares’ Butterfill said the effects of high interest rates will increasingly weigh on the economy over the coming months. He added that this will make it harder for the Fed to hold a hawkish monetary policy stance.

“Looking a little further ahead, as high-interest rates increasingly weigh on the economy, the prospects for any further rate hikes will diminish, which will be likely supportive for bitcoin,” he said.

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