Bitcoin remained flat Wednesday afternoon with most crypto investors unsurprised by the Federal Reserve’s plans to raise interest rates by 75 basis points in June, the largest monthly hike since 1994.
The central bank also signaled it plans to increase rates by another 175 basis points over its four remaining meetings scheduled this year.
During the central bank’s press conference following its decision, bitcoin fell to $20,392. But by its end, the largest cryptocurrency climbed back above $21,900, off 1% in the past 24 hours. In the last week, it's down 27%.
Ether rose from a low of $1,079 to $1,170 per unit Wednesday afternoon, but remains 3.8% lower on the day and down 34% in the last seven days.
"While less affected, crypto markets are still very largely influenced by macro sentiment," Noelle Acheson, head of insights with Genesis Trading, told Yahoo Finance Live (video above). "And after what we've seen in the crypto markets over the last few days, the relief rally is very welcome."
Here’s how other cryptocurrencies are faring Wednesday afternoon.
Binance's BNB token (BNB-USD), up 1.6%
Solana (SOL-USD), up 3.6%,
Cardano’s ADA token (ADA-USD), up 4.4%,
Dogecoin (DOGE-USD), up more than 4%,
Polkadot's DOT token (DOT-USD), up 3%,
Tron (TRX-USD), up 4.6%,
Avalanche's AVAX token (AVAX-USD), up 3.6%
Polygon's MATIC token (MATIC-USD), down 2%
Since November, the Federal Reserve’s decision to raise interest rates and offload its balance sheet has drained investor demand for crypto and other riskier assets. More recently, those tightening conditions have forced larger players in the sector to unwind positions.
"The shaky situation with crypto firms has muted a lot of the anxiety we would normally have with a 75-basis-point hike," Michael Safai, a partner with crypto trading firm Dexterity Capital, told Yahoo Finance before the Fed decision, noting that bitcoin at $20,000 is a key psychological indicator.
So far, bitcoin remains above that, but Safai said ongoing inflation and the challenges fighting will likely continue to create weakness in crypto.
Within the crypto sector, investors are also awaiting briefings from two industry players — Celsius Network and 3 Arrows Capital as well as other firms exposed to their books — to gauge if they risk solvency issues, which have sparked contagion fears.
While neither firm has responded to Yahoo Finance’s request for comment, both 3 Arrows Cofounder Su Zhu and Celsius Founder and CEO Alex Mashinsky have publicly stated within the last 24 hours that they will communicate developments without providing further details.
The industry is also contending with recent layoffs from major firms such as Coinbase, BlockFi, Crypto.com, Gemini and Robinhood, underscoring the uncertainty in the crypto world.
Overall, the total crypto market cap has dropped 1.8% in the past day, losing 69% of its value since peaking in November, falling from $3 trillion at its apex to $926 billion as of Wednesday 3:30 p.m. New York time, according to Coinmarketcap.
“If things remain unstable in the next few days, we could see fresh lows," Safai said. "Trading activity continues to be robust, with some volumes and volatility driving some firms back in. This likely won’t last, as available capital from lenders will continue to tighten, but it’s serving as good news for exchanges.”
David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @dshollers.
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