Bitcoin’s price dropped to around $57,000 per coin on Thursday, reaching a two-month low due to a challenging macroeconomic environment and the collapse of industry giants like FTX and Terra. The U.S. Federal Reserve’s decision not to cut interest rates further contributed to the decline in value. At one point, the digital currency fell by 5% in a 24-hour period to $56,837, marking the first time it had fallen below $57,000 since May. Bitcoin has since recovered slightly and was trading at $57,932.57, down 3.4% as of 5:05 p.m. London time. Ether, the second-largest cryptocurrency, also experienced a 5% drop to $3,120.
The Federal Reserve’s release of meeting minutes from June revealed that officials are hesitant to lower interest rates until inflation data aligns with the central bank’s target of 2%. Higher interest rates are generally unfavorable for bitcoin and other cryptocurrencies as they reduce investor risk appetite. In March, bitcoin reached an all-time high of over $73,700 following the approval of the first U.S. spot bitcoin exchange-traded fund by the Securities and Exchange Commission.
Despite recent challenges, analysts believe that bitcoin has not yet reached the peak of its current appreciation cycle and could still achieve a new all-time high. The upcoming distribution of around $9 billion worth of coins by the collapsed bitcoin exchange Mt. Gox is expected to prompt significant selling action. However, historical market cycles suggest that bitcoin’s “halving” event, which reduces the supply of new bitcoins, typically precedes a period of price expansion lasting between 12 to 18 months.
Tom Lee, a prominent bitcoin bull, remains optimistic about the cryptocurrency’s future, predicting that it could reach $150,000 despite the looming impact of Mt. Gox’s token disbursement. Lee believes that the resolution of this issue in July could lead to a sharp rebound in the second half of the year.