Bitcoin prices fell back today after the FOMC announcement. (Photo by Dan Kitwood/Getty Images)
Bitcoin prices continued to experience their typical volatility today, falling after the Federal Open Market Committee (FOMC) released its latest statement indicating it would leave benchmark rates unchanged.
The world’s most valuable digital currency by total market capitalization dropped to $67,443.55 around 4 p.m. EST, CoinMarketCap figures show.
In its latest announcement, the FOMC revealed that it was keeping the target range for the benchmark federal funds rate, which impacts broader lending costs, between 525 and 550 basis points.
The committee emphasized that the economy has been showing encouraging signs, noting that “Job gains have remained strong, and the unemployment rate has remained low.”
However, the group of policymakers emphasized that while the committee has made “modest” progress toward bringing price pressures under control, inflation “remains elevated.”
Looking to the future, the FOMC emphasized that the “economic outlook is uncertain” but that it would keep a close eye on “inflation risks.”
The members of the FOMC provided revised forecasts, in which they estimated that the federal funds rate will end this year at 5.1%, which would represent one 25 basis point rate cut. This is down from their March prediction of 4.6%.
CPI Figures Fuel Rally
The cryptocurrency suffered the aforementioned price drop after rallying to almost $70,000 earlier in the day, reaching $69,977.89 around 10:30 a.m. EST, additional CoinMarketCap data reveals.
Around 8:30 a.m. EST, the digital currency started climbing, increasing more than 2% in less than 20 minutes.
The aforementioned rally took place right around the time the Bureau of Labor Statements released the latest inflation report, which indicated that the Consumer Price Index for All Urban Consumers (CPI-U) did not increase in May, after rising 0.3% in April.
This result was better than a forecasted increase of 0.1% predicted by analysts taking part in a Wall Street Journal poll.
Bitcoin responded positively to this outcome, experiencing a rapid but reasonably modest gain as it climbed close to $1,500 in less than 20 minutes.
The CPI increased 3.3% during the 12 months through May, but this figure was lower than the 3.4% from the previous month.
Inflationary pressures, as well as the impact they have on the federal funds rate, have been front and center for many cryptocurrency market participants.
Rising yields could potentially sap demand for these digital assets, which in many cases do not provide their investors with regular interest payments.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.