US macroeconomic uncertainty has sent Bitcoin into a two-month decline. However, falling inflation suggests that monetary policy may soon support risk appetite. 📉

Bitcoin (BTC) dropped below $57,000 minutes following the US Federal Reserve meeting. This confirmed that current interest rates will continue until economic data justifies looser policies.

“The Fed's decision to wait and see before committing to interest rate cuts signals cautious optimism that inflation is on a downward trend,” said Jag Kooner, Head of Derivatives at Bitfinex.

BTC showed the macro correlation that Token Bay Capital founder Lucy Gazmararian noted last month. High interest rates generally reduce demand for risky assets such as cryptocurrencies, which may have triggered Thursday's market activity.

BTC traded between $56,800 and $70,000 after a fast start at the beginning of the year as the central bank focused on its 2% inflation target. However, Kooner predicted that upcoming data could shape a clearer outlook for the coming months.

According to Kooner, the Nonfarm Payrolls (NFP) report expected on Friday could raise expectations for future interest rate cuts or put further downward pressure on Bitcoin.

If market participants believe that ongoing economic uncertainty will eventually encourage the Fed to lower interest rates, Kooner said Bitcoin's appeal against inflation could increase again, which could direct capital into spot BTC ETFs.