Just last week, President Donald Trump voiced his optimism that the Federal Reserve would soon start cutting interest rates after a private meeting with Chair Jerome Powell.
However, upon the central bank’s decision to leave interest rates unchanged, things took a drastic turn on Thursday, July 31.
Namely, the Federal Reserve kept its benchmark rate at 4.25–4.5%, citing the need for more economic data before making any cuts.
The crypto market reacted negatively following the news, with over $150 billion in market value wiped out in a day, falling from $3.89 trillion to $3.74 trillion.
Cryptocurrencies see multi-week lows
In the aftermath, Bitcoin (BTC) dropped as low as $114,400, its lowest price in three weeks, while Ethereum (ETH) dropped 4.94% to $3,628.
Something similar happened in April, when Trump announced his first tariff increases. At the time, Bitcoin plunged to a five-month low within days of the announcement, while the market wiped out nearly $500 billion.
Altcoins took an even bigger hit. XRP, for instance, dropped by 7.38%, while SPX6900 (SPX) plunged by no less than 17.44%, just days after becoming the best-performing coin in the past 90 days.
Looking ahead, traders on Polymarket, a crypto-oriented prediction platform, bet that there’s almost a 60% chance we’ll see zero to one Fed rate cuts by the end of 2025.
The change in market sentiment likely reflects rising inflation worries and renewed trade war issues.
Since the global crypto market capitalization has declined by 3.82% to $3.74 trillion since the Federal Reserve’s announcement, many are left wondering how things are going to play out for digital assets.
Featured image via Shutterstock
