• Federal Reserve Chairman Jerome Powell’s comments at the FOMC press conference on January 31 have dampened expectations that a rate cut in March is imminent.
• Bitcoin fell to $42,300, major crypto assets such as Ethereum, Cardano, and Polkadot were down 3-4%, and Solana was down more than 6%.
• According to SwissBloc, Bitcoin continues to consolidate in a channel with no clear direction between $42,000 and $44,000.

Cryptocurrency markets fall on January 31 as hawkish comments from Federal Reserve Chairman Jerome Powell dampen expectations that a rate cut is imminent did. Bitcoin (BTC) fell below $43,000 (approximately 6,235,000 yen, equivalent to 145 yen per dollar).

The Federal Reserve left its benchmark federal funds rate unchanged at 5.25% to 5.5%, as expected, after the first Federal Open Market Committee (FOMC) meeting of the year. Market participants are increasingly watching for clues about when the Fed will begin cutting rates, with many observers expecting it to begin as early as its next March meeting.

“Based on today’s meeting, I don’t think it’s likely that the committee will reach a level of confidence by the March meeting to identify that the time (for a rate cut) is March,” Powell said in a post-meeting press conference. ” he said.

Powell gives a hard shove *against* a March cut:

“I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to [cut]but that’s to be seen.”

— Nick Timiraos (@NickTimiraos) January 31, 2024

Risk assets fall sharply

Immediately after this statement, risk assets such as crypto assets fell sharply. Bitcoin has fallen from an intraday high of $43,700 to $42,300, and is down 2.3% in the past 24 hours. The CoinDesk 20, a crypto market benchmark that covers about 90% of the market capitalization of digital assets, fell nearly 3% during the same period.

Other major crypto assets such as Ethereum (ETH), Cardano (ADA), Avalanche (AVAX), and Polkadot (DOT) fell 3-4%, while Solana (SOL) fell more than 6% on the day to 100. It fell below the dollar.

In traditional markets, the Nasdaq Composite Index fell 2.2% and the S&P fell 1.6%.

Probability of interest rate cut in March drops significantly

“The market is ahead of the curve on interest rates,” Alex Krüger, macro analyst and co-founder of investment research firm Asgard Markets, said on X (formerly Twitter). “The rate cuts will start in May or June, not March.”

The CME FedWatch Tool also shows that the probability of a March interest rate cut has been lowered from about 65% before the announcement to 34.5%.

Is the search for a lower price for Bitcoin limited?

Ruslan Lienkha, head of markets at YouHodler, a Web3 fintech platform, said: “Hawkish rhetoric about a period of higher-than-expected interest rates will trigger a stock market correction.” , which could result in capital outflows from risky assets such as Bitcoin.”

Meanwhile, analysts at Swissblock said in a January 31 market report that Bitcoin appears to be consolidating between $44,000 and $42,000 without a clear direction. He said that, as the market appears to be moving, the search for a downside may be limited.

The report noted that the $42,000 area and sub-$40,000 levels could serve as key support levels where buyers could enter.

｜Translation and editing: Rinan Hayashi
｜Image: CoinDesk
｜Original text: Bitcoin Dips to $42.4K as Fed’s Powell Pours Cold Water on March Rate Cut