Bitcoin Dips as Fed Holds Rates Steady, Dashing Hopes for March Cut

On Wednesday, Bitcoin’s value experienced a 2.5% decline as the Federal Reserve in the United States chose to maintain the status quo on interest rates, quelling speculations about potential rate reductions in the upcoming month.

Bitcoin, trading under the symbol BTC, saw its price drop to $42,540. This downturn occurred in response to the Federal Open Market Committee’s announcement on January 31st. The Committee, during their press conference, confirmed that interest rates would remain between 5.25% and 5.50%. They emphasized the need for increased confidence in effectively addressing inflationary pressures before considering any rate cuts.

Following this announcement, Bitcoin’s price marginally decreased by over 2.2%, trading around $42,590, as reported by TradingView. Despite this dip, Bitcoin has shown a 7% increase over the week.

In their statement, the Federal Reserve Board expressed that reducing the target range wouldn’t be advisable until there’s greater assurance that inflation is steadily moving towards the 2% mark.

The Federal Reserve acknowledged the robust economic growth, citing continuous job creation and a decline in unemployment rates as signs of economic resilience.

However, the Fed maintained a cautious stance, noting that although inflation has softened over the past year, it still remains at a level that doesn’t guarantee rate reductions.

“The economic outlook remains uncertain, with the Committee keeping a close watch on inflation risks,” the statement read.

Interest rate cuts are generally seen as positive for high-risk assets like cryptocurrencies and technology stocks. When the Fed lowers rates, borrowing becomes more affordable, stimulating spending and risk-taking in the economy.

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