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Bitcoin Dips To $42.4k As Fed’s Pool Pours Cold Water And Cuts On March Night

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In this article, we talked about Bitcoin dips On Wednesday, January 31, 2024. The price of Bitcoin dropped to $42,400. This happened because of statements by Federal Reserve Chair Jerome Powell. This is a brief overview of the scenarios:

Regarding a March interest rate cut, Fed Chair Powell was cautious. This surprised the markets because many investors had been expecting a drop.

Powell stated, “I am not sure that the board will be confident by March.” They won’t be able to identify March as the time to [cut].” This was after the Federal Open Market Committee meeting. The speech had a big impact on both the traditional and cryptocurrency markets. It caused the S&P 500 to drop by 1.6% and the Nasdaq to drop by 2.2%.

Blockchain Market Acts on Powell’s Comments

A 2.3% decline in Bitcoin’s value from $43,700 to $42,300 has an impact on the whole cryptocurrency market. The value of the digital asset market was also reflected in a 3% decline in the CD20 index. The $42,000 mark, maybe even lower than $40,000, is key support. It attracts buyers, even if Bitcoin stays stuck between $44,000 and $42,000.

Other major cryptocurrencies also fell. Solana (SOL) lost over 6%. Ethereum (ETH), Cardano (ADA), and Polkadot (DOT) dropped 3 to 4%.

YouHodler’s Chief Warns of Potential Market Consequences

Both investors and traders have been watching the meeting. They are looking for signs of a rate cut in March. Still, Powell’s remarks changed investors’ expectations and caused drops in several different assets. As for the CME FedWatch Tool, it saw a big drop in the chance of a rate cut in March. The odds fell from about 65% to 34.5%.

Alex Krüger is a co-founder of Asgard Markets. He is a macroanalyst. He said, “The market is overestimating rates.”” He said that cuts in May or June are more likely than in March. This shift in expectations affected traditional stocks and cryptocurrencies. It caused a chain reaction in the financial markets.

Ruslan Lienkha is the chief of markets at Web3 fintech startup YouHodler. He pointed out the possible results of any negative statements. They suggest a longer-than-expected period of high rates. Such claims may cause the stock market to drop. They may cause investors to move their money from risky investments. These include Bitcoin and other cryptocurrencies.

Cryptocurrencies are like regular financial markets. We see this in their price variation. The price of cryptocurrencies frequently drops along with riskier assets like stocks.

Conclusion

In short, Fed Chair Powell’s alert surprised markets. He said that rates would drop in March. This caused Bitcoin to fall to $42.4K. The larger cryptocurrency market reflected the drop. It also caused declines in traditional markets like the S&P 500 and Nasdaq. Powell’s comments affected market expectations, affecting equities as well as cryptocurrencies. Experts like Ruslan Lienkha and Alex Krüger said the market overestimated rate cut odds. They also overestimated the cuts’ impact on investors. The response’s interconnectivity highlights a careful balance. It is between global market forces and central bank communication.

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