Bitcoin closed lower on Wednesday following a firm policy hold from the US Federal Reserve.
As expected, the Fed decided to maintain the Fed funds rate at its 23-year peak of 5.25%-5.5% for the fourth time in a row.
Fed chair Jerome Powell indicated that rate reductions might start this year, but not likely in March, and each meeting will guide the central bank’s decisions.
This emerging higher-for-longer policy is a problem for riskier assets like bitcoin, as it reduces risk taking among investors.
As a result, the BTC/USD pair continued to move around 0.9% lower this morning to change hands for less than $42,200 at the time of writing.
Alongside macroeconomic pressures, bitcoin is also struggling to break above the 50-day moving average trend line.
The 50-day MA, which tallies bitcoin’s closing price over the period to provide a smoothed-out price trend, has emerged as a key resistance point since bitcoin’s underwhelming post-ETF performance.
It is currently trending at $42,800, making this a key hurdle for the bulls to overcome.
Bitcoin is still higher against the US dollar by more than 5% week on week, though it has dipped into the red year to date following three straight days of losses.
Bitcoin is slightly down year to date – Source: tradingview.com
Ethereum (ETH), the second-largest cryptocurrency, was knocked 2.5% lower against the US dollar yesterday and had continued to underperform this morning.
At the time of writing, the ETH/USD pair was swapping for $2,272.
The broader altcoin space also suffered losses against the dollar, with BNB, Solana (SOL), Ripple (XRP), Cardano (ADA) and Avalanche (AVAX) all shaving mid-single digits from their market capitalisations.
Global cryptocurrency market cap currently stands at $1.62 trillion, with bitcoin dominance at 52.6%.