Bitcoin (BTC), the most prominent digital currency, recently fell below $42,000 earlier this week. The decline - which was bolstered by the release of the latest US Consumer Price Index (CPI) numbers - raises more questions about the currency's performance in the short term.
Despite this decline, Bitcoin still maintains levels above $41,000, confirming its dominance of the market up to 53%. However, the sensitivity of the cryptocurrency market to the decisions of the Federal Reserve is undoubtedly evident.
Meanwhile, market sentiment is witnessing a state of volatility awaiting the Federal Reserve's decision on interest rates.
While the Federal Reserve's temporary reluctance to raise interest rates - a sign of slowing inflation - may have sparked a wave of optimism among investors, the prospect of interest rate hikes - which have already reached their highest level in 22 years - is receding further. Digital in the currency sector.
The position of the Federal Reserve and its impact on the market and Bitcoin (BTC).
The Federal Reserve's decision to keep interest rates on hold at yesterday's meeting has received a lot of attention, especially regarding the outlook for next year.
These expectations indicate a trend to lower interest rates aimed at stimulating growth, following assurances by the Federal Reserve that inflation is nearing its 2% target rate. Despite the strong November employment data, the Fed still sees the need to maintain the current interest rate range of 5.25% to 5.50%.
Financial markets are anticipating a possible rate cut next spring, but the Federal Reserve's reluctance to provide a clear plan on interest rates has kept those markets on edge.
