Bitcoin (BTC) Price Drops to 2-Month Low After Fed Minutes

Bitcoin Gold fell to around $57,000 a share on Thursday, its lowest in two months, after the US Federal Reserve released minutes of its June meeting that suggested the central bank was not yet ready to cut interest rates.

At around 2:30 p.m. London time, the cryptocurrency had fallen about 5% in 24 hours to $56,837, dropping below the $57,000 level for the first time since May 1, according to data from cryptocurrency rating site CoinGecko. Bitcoin has since pared some of its losses and was trading at $57,932.57, down 3.4% as of 5:05 p.m. London time.

Rival ether, the world’s second-largest cryptocurrency, fell 5% to $3,120.

This comes after the US Federal Reserve on Wednesday released minutes of its June meeting that showed officials were reluctant to cut interest rates until additional data showed inflation moving sustainably toward the central bank’s 2% target.

Higher interest rates are generally less favorable for Bitcoin and other cryptocurrencies because they dampen investors’ appetite for risk.

Bitcoin hit an all-time high of more than $73,700 in March of this year after the Securities and Exchange Commission approved the first U.S. spot bitcoin exchange-traded fund, or ETF.

ETFs allow investors to buy a product that tracks the price of bitcoin without owning the underlying cryptocurrency. Cryptocurrency advocates say this has helped legitimize the asset class and made it easier for larger institutional investors to participate.

Since then, the price of Bitcoin has been trading in a range between $59,000 and $72,000.

Recently, the world’s largest cryptocurrency has been under pressure due to news of the collapse of Bitcoin exchange Mt. Gox, which is preparing to distribute $9 billion worth of coins to users, which is expected to lead to some heavy selling.

However, analysts at crypto data and research firm CCData said in a research report on Tuesday that Bitcoin has not yet reached the top of the current appreciation cycle and is likely to reach an all-time high.

According to the report, historical market “cycles” have shown that the so-called Bitcoin “halving” event — which cuts off the supply of new Bitcoin to the market — has always been preceded by a period of price expansion that can last 12 to 18 months “before producing the cycle top.”

The last Bitcoin halving occurred on April 19 of this year, so these historical time frames have not yet passed.

“Furthermore, we have observed a decline in trading activity on centralized exchanges for about two months following the halving event in previous cycles, which appears to reflect this cycle. This suggests that the current cycle may extend further into 2025,” according to CCData.

Meanwhile, Tom Lee, a leading bitcoin bull, told CNBC’s “Squawk Box” on Monday that he still expects bitcoin to hit $150,000 despite the “negative impact” from Mt. Gox’s token swap to creditors.

“If you’re a crypto investor and you know that one of the biggest surpluses is going to disappear in July, I think that’s a reason to expect a sharp rebound in the second half,” Lee, co-founder and head of research at Fundstrat Global Advisors, said in the TV interview.