Bitcoin fell below $29,000 on Thursday after the US Federal Reserve indicated the need to maintain its tight stance in the meeting minutes published on August 16. Bitcoin experienced a 2% drop overnight and is currently trading around $28,600.
This decline also pulled down the broader crypto market, with the total market value dropping by 1.7% or nearly $20 billion overnight, according to data. Ethereum is also struggling to hold the $1,800 support level and is trading around $1,795 with a 1.5% drop in the last 24 hours.
The S&P 500 index continued its decline since Tuesday and experienced a 0.76% drop. NASDAQ closed the day with a 1.15% decline.
The Dollar Index (DXY) gained 0.54% against other major currencies this week due to the Fed’s interest rate expectations and reached a one-month high yesterday.
In the Fed policy interest rate meeting last month, the interest rate was raised to the highest level in 22 years, between 5.25% and 5.50%. Many expected the interest rate hike, which started aggressively from zero in March 2022, to be one of the last increases made to control high inflation.
The central bank’s interest rate hikes have been one of the most important factors limiting the rise of risky assets such as stocks and cryptocurrencies. Higher borrowing costs suppress growth and expansion and attract investors to safer bets like Treasury bonds. It is also one of the fundamental tools in the Fed’s hands to balance rising consumer costs.
However, the latest meeting minutes show that the Fed’s decision-making committee is “extremely cautious about inflation risks.” The document also stated that the business outlook is positive with “strong” job gains and low unemployment rates.
