The crypto market experienced a notable drop following the recent announcement from the United States Federal Reserve. While Bitcoin had seen a slight 0.37% increase prior to the FOMC meeting, the leading cryptocurrency did not witness any significant price pumps afterward.
The Federal Reserve decided to maintain its federal fund’s interest rate at 5.25%, which marked the end of a prolonged period of consecutive rate hikes. This decision drew considerable attention from the market, given the turbulent weeks that cryptocurrencies had been experiencing.
Investors eagerly awaited the outcome of the meeting, hoping for a potential price surge or decline.
Crypto Market Declined After the FOMC Meeting
In the aftermath of the FOMC meeting, Bitcoin quickly slipped into the red, experiencing a 3.61% drop within the last 24 hours. The cryptocurrency’s price hovered between $25,800 and $26,000 before the Fed’s announcement, but at the time of writing this line, it was trading at $24,959.53.
Ether, the second-largest cryptocurrency by market capitalization, also suffered a significant decline, dropping by over 5.41% to $1,644 just a few hours after the Fed’s decision. Other prominent cryptocurrencies such as ADA, SOL, BNB, and Matic followed suit, each experiencing drops of more than 4%.
Overall, the market capitalization of the cryptocurrency market fell by 3.38% within the last 24 hours, currently standing at $1.021 trillion.
Impact of the SEC Lawsuits and Other Factors
Bitcoin’s failure to rally and the subsequent drop in its price, along with the decline of most other cryptocurrencies in the crypto market, can be attributed to ongoing price instability, regulatory concerns, and the absence of immediate bullish signals.
Crypto educator Budhil Vyas, in a tweet, mentioned that the outcome of the FOMC meeting could potentially be bullish and favor market growth. However, he cautioned that such movements might take time to materialize and sudden fluctuations may not be expected.
No changes in Rates.
— Budhil Vyas (@BudhilVyas) June 14, 2023
The unimpressive response of the cryptocurrency market to the rate hike pause might also be attributed to the recent Securities and Exchange Commission (SEC) lawsuits against leading crypto companies, Binance and Coinbase. Alongside macroeconomic uncertainties and the signals of Fed monetary policy, these events contributed to the muted price action and the absence of a bullish reaction.
Furthermore, data from CoinGlass revealed that the crypto market suffered liquidations amounting to $124.2 million within a four-hour period, with Bitcoin and Ethereum accounting for a significant portion of these liquidations. Over 40,600 traders were liquidated in just 24 hours, primarily on exchanges such as OKX, Binance, and Huobi.