Bitcoin crashed below $64,000: the hawkish rhetoric of the new Fed chair sent the crypto market tumbling
The first cryptocurrency broke through the psychologically important level of $64,000, showing a sharp decline after the first Federal Reserve meeting chaired by Kevin Warsh. The digital asset market reacted immediately, and this came as no surprise to those who closely followed the rhetoric of the new head of the regulator.
The Fed kept the key interest rate in the range of 3.5-3.75% per annum, but the key signal was Warsh's statement about the possibility of raising the rate by the end of the year. The dot plot showed a split within the committee: nine officials favor maintaining or lowering the rate, while another nine expect at least one increase. Warsh himself diplomatically avoided a personal assessment, calling this format "limiting" for future policy.
New working groups and a "hawkish" stance
Warsh announced the creation of five working groups that will study the regulator's communications, asset balance, data sources, the impact of artificial intelligence on the economy, and methods of combating inflation. However, markets focused on something else. During the press conference, the Fed chairman mentioned "price stability" more than ten times, which investors unequivocally interpreted as a "hawkish" signal. The yield on two-year U.S. Treasury bonds soared by 14.4 basis points, and stock indices moved downward.
Crypto market reaction: bitcoin and altcoins in the red zone
Bitcoin quotes fell to ~$63,680. Ethereum lost 3.15%, Solana and XRP dropped by 2.9% and 3.8%, respectively. The only exception was TRX, which showed modest growth of 0.75%. The GMCI 30 index, tracking the largest assets by market capitalization, lost 2.6%.
Notably, traditional safe-haven assets also did not hold up: the price of gold fell by 1.39%, silver dropped by 2.79%. At the same time, the stock market showed mixed dynamics: the S&P 500 and Nasdaq indices rose amid the signing of an interim agreement with Iran and the opening of the Strait of Hormuz.
My analysis: The cryptocurrency market continues to be extremely sensitive to macroeconomic signals, and the rhetoric of the new Fed chairman only confirms this trend. The "unconditional" commitment to return inflation to 2% means we may see several more rounds of policy tightening, which will put pressure on risky assets. The consolidation of bitcoin, which QCP Capital analysts discussed on June 17, appears to have transitioned into a correction phase. Investors should prepare for increased volatility in the coming weeks.