Bitcoin (BTC) is treading water right around $64,000 U.S. after the Federal Reserve signalled that interest rates are likely to rise later this year.
As was widely expected, the U.S. central bank elected on June 17 to keep its benchmark federal funds rate at its current target range of 3.50% to 3.75%.
However, the Fed showed an inclination towards raising interest rates later this year as inflation in America remains elevated and above 4%.
The Federal Reserve targets inflation at an annualized rate of 2%.
The central bank’s Open Market Committee is leaning toward a 25-basis point interest rate increase in the year’s second half.
Going into the latest interest rate decision, financial markets were pricing in a 64% chance that the U.S. Federal Reserve will raise interest rates a quarter of a percentage point in December.
Higher interest rates are bad news for risk assets such as Bitcoin and other cryptocurrencies such as Ethereum (ETH).
Stocks sold off sharply on news that the U.S. Federal Reserve sees interest rates moving higher. However, digital asset prices barely moved and have held at current levels.
In early trading on June 18, Ethereum’s price is up 0.50% at $1,750 U.S., the same level it has been at for most of this week.
Analysts note that crypto prices appear to have firmed up after the U.S. and Iran announced a peace deal that has sent the price of crude oil plunging below $80 U.S. a barrel.
Bitcoin’s price had fallen as low as $60,000 U.S. in recent weeks but has since moved higher.
Some analysts say the U.S. Federal Reserve might back off its plan to raise interest rates should lower oil and gas prices exert downward pressure on inflation in coming months.
