Bitcoin below $25,000 on hawkish Fed, regulatory crackdown

The world’s largest cryptocurrency by market value traded at $24,897, nearly 4 per cent lower from $25,930 on Wednesday

Bitcoin dropped below $25,000 early on Thursday, as digital assets take a hit from an aggressive clampdown by US regulators and hawkish signals from the Fed.

The world’s largest cryptocurrency by market value traded down to $24,897 on Thursday morning, nearly 4 per cent lower from $25,930 on Wednesday. Ethereum, meanwhile, dropped to $1,636, around 6 per cent lower from Wednesday’s levels.

The plunge came soon after the Fed kept interest rates unchanged at the end of its two-day policy meeting, but hinted that further interest rate raises could come later this year as central bankers continue their battle against inflation.

The Fed’s dot-plot of predicted rate moves and Chairman Jerome Powell’s “hawkish pause” spooked traders, who had been thinking that the Fed could be about to hint its rate-hike campaign was over.

Markets are presently pricing in a 65 per cent probability that the Fed will hike rates another 25 bps in July.

Tighter monetary policy is contributing to pressures being deployed by regulators, with bitcoin and ethereum prices dropping as the Securities and Exchange Commission looks to monitor the sector more tightly.

Binance and Coinbase were sued this month by the Securities and Exchange Commission. The regulator’s complaint says that both companies are operating illegally in the US and that they have infringed rules by offering their customers unregulated securities.

The suits are part of the SEC’s measures against the broader crypto sector, Binance said in a statement last week while dismissing the allegations. Experts told business website Insider that the lawsuits could set an example for how crypto companies are treated in the US, possibly resulting in an existential crisis for the crypto sector at large.