Market analysts said that after the Federal Reserve of the United States maintained its interest rates unchanged while signaling continued concerns about inflation, Bitcoin may face further headwinds.
On Wednesday, the Federal Reserve maintained its benchmark interest rate between 3.75% and 4% with a vote of 10 in favor and 2 against. Federal Reserve Governor Lisa Cook ( Lisa Cook ) and Cleveland Fed Chair Beth Harker ( Beth Hammack ) supported a 25-basis-point interest rate hike.
Federal Reserve Chairman Kevin Warsh ( Kevin Warsh ) admitted that inflation is still above the central bank's target of 2%.
He said, "Americans... are still dealing with inflation, which has been above the committee's target for nearly six consecutive years. It is our responsibility to bring inflation down."
Eiki Ioppe, the Chief Investment Officer of the tokenization platform Theo, stated that this decision was within market expectations, but investors did not fully anticipate the hawkish stance of the Federal Reserve.
In his comment to Cointelegraph, he said, "The market has already factored in the pause in action into the prices, but not the hawkish tone."
The market currently expects the Federal Reserve to raise interest rates at its meeting on December 8-9, and there is a possibility of another rate hike next year.
CME FedWatch data shows that as of Wednesday, traders believe the probability of a 25-basis-point interest rate hike in December is 78.4%, and the probability of at least a 25-basis-point hike in March is 67.3%.
Wash refused to comment on whether the Federal Reserve would raise interest rates by the end of the year.
He said, "Many things can happen, so I won't share with you my thoughts about what will occur when this group gathers again in six weeks."
Iope stated that, with interest rates remaining high, Bitcoin must compete with the near-4% risk-free interest rate.
Related Reading: Before FOMC and the release of financial reports, Bitcoin prices rebounded but were hindered by the 50-day trend line.
However, analyst Lewis Huang (Lewis Huang) stated that the next move of Bitcoin may not be as dependent on U.S. Treasury yields, the dollar, and broader investor sentiment as the Fed's decision itself.
He said, "In the context of the limited new direction set by the Federal Reserve, the short-term performance of Bitcoin may depend to a greater extent on U.S. Treasury yields, the trend of the dollar, and broader risk sentiment."
Analysts, including Huang, are currently focusing on the personal consumption expenditure ( PCE ) inflation report to be released on Thursday, as well as the financial reports of large technology companies, in order to find clues regarding the direction of risky assets.
Fabien Dorier, the Chief Investment Officer of China CITIC Bank ( Sygnum Bank ), also expressed agreement, adding that with the release of inflation data on Thursday ( PCE ), "the next few days will be even more interesting."
He added, "This week, several of the 'Big Seven' companies are releasing their financial reports, which will help to clarify whether capital expenditures in artificial intelligence are being translated into revenue. After these short-term catalysts, broader liquidity and financial conditions are likely to determine the path towards the resolution in December."
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