Bitcoin is in the red, along with the majority of the crypto market. While some had expected price increases following yesterday’s positive news, there is a clear reason why prices are actually falling today.
Bitcoin suddenly starts to decline #
The price of bitcoin fell sharply yesterday. The price initially seemed to be rising for the fourth consecutive day, but towards the end of the day it became clear that bitcoin would end in the red.
In the past 24 hours, the price of bitcoin has fallen by about 3 percent. However, the coin has remained above the important price level of $90,000 and is currently worth $90,215.
Bitcoin is not the only coin that has fallen. The total market value of the crypto market has fallen by 2.5 percent today alone. Other major cryptocurrencies have also fallen, including ethereum by 3.5 percent, XRP by 3 percent, and solana by as much as 5.5 percent in the last 24 hours.
Why uncertainty prevails in the crypto market #
The price drop comes as a surprise to some, as the crypto market actually received good news yesterday. The U.S. central bank, the Federal Reserve (Fed), gave the green light: interest rates will be cut.
Interest rate cuts generally have a positive effect on the crypto market. They stimulate liquidity and make riskier investments more attractive. However, the Fed’s message this time is not entirely optimistic.
It appears there are many internal disagreements at the Fed about the bank’s upcoming economic steps. Some voted against the rate cut while others voted for even further cuts. Moreover, the Fed hinted that there will be only one rate cut next year.
Additionally, the U.S. economy is still far from healthy, according to the Fed’s speech. The labor market is weakening and the country’s financial reserves are thin.
Overall, the Fed’s message has had a mixed effect on the crypto market and there are many reasons for uncertainty. For now, the Fed seems able to protect the U.S. economy, but the central bank warns that the coming year could be challenging.