FOMC’s Rate Cut U-Turn Sparks $200M Crypto Liquidation Spree

With just a few meetings left before the elections, the FOMC remains reluctant to introduce rate cuts.

Jeremy Powell showing us the hike intrest rate.
Created by Kornelija Poderskytė from DailyCoin
  • The FOMC maintains rates at a 23-year high.
  • The central bank is less confident about introducing rate cuts. 
  • The crypto market responds to the FOMC’s hawkish stance.

US inflation remains persistent despite the FOMC’s ongoing efforts to tame it. Commodity prices and employment rates continue to spiral out of control, while the central bank delays introducing relief by holding off on its promise of three rate cuts. 

With only two meetings left before the November elections and half the year already gone, the FOMC appears increasingly hesitant to introduce even a single rate cut before year-end, sparking chaos in the crypto market. 

FOMC Keeps Rates Steady Again

On Wednesday, June 12, the Federal Reserve held its fourth policy meeting of the year, deciding unanimously to keep interest rates steady at their current range of 5.25% to 5.5%. The central bank has held the policy rate on hold since July 2023 to anchor in high inflation and consistently bring it down toward the 2% target range.


Federal Reserve Chair Jerome Powell hawkishly noted that the central bank isn’t ready yet to introduce rate cuts despite “considerable progress.” Powell’s comments come despite the central bank promising to introduce three cuts for 2024 in December 2023, none of which have materialized so far.

Instead, the central bank has backtracked on its promise of three rate cuts, scaling it down to just one for the year. Powell emphasized that the central bank’s tight monetary policy is achieving its intended effect on inflation.

This reluctance and uncertainty from the FOMC have echoed through the crypto market, triggering a wave of liquidations and heightening volatility.

Crypto Market Slips

Over the past two days, the crypto markets witnessed nearly $400 million in liquidations. Bitcoin, after soaring to $70,000 on Tuesday, plunged to $66,000, possibly reacting to the FOMC’s hesitation to introduce rate cuts.


Ethereum, which comfortably hovered above $3700, slipped to $3400. Other altcoins, including Cardano, Solana, and Ripple, weren’t spared, dropping at least 8%.

Adding to the turbulence, US spot Bitcoin ETFs saw net outflows of $200 million, continuing the trend from Monday and ending their record 19-day streak of net inflows.

Despite a momentary lift from the US CPI report, which came in cooler than expected at 3.3% year-over-year in May versus the anticipated 3.4%, the market quickly returned to its initial levels, underscoring a persistent lack of investor confidence.

Bitcoin, which had surged to $70,000 following the CPI news, was trading under $68,000 at press time. 

On the Flipside

  • According to a Grayscale-backed survey, 41% of US voters are paying more attention to Bitcoin due to the US’ persistent inflation. 
  • Other economic blocs, such as the EU and Canada, have opted to implement rate cuts this year despite grappling with inflation.

Why This Matters

The FOMC meeting is notorious for moving the market. The financial world, including the crypto market, carefully analyzes each meeting to assess the current US economic landscape and make investment decisions accordingly. Rate cuts, in particular, are often viewed as positive developments because they provide investors with leeway to borrow capital and consider investments in higher-risk assets such as cryptocurrencies.

Orbit Chain hacker moves $48M:
Orbit Chain Hacker Goes Online, Moves $48M Through Tornado Cash.

Charles Hoskinson welcomes the age of Voltaire:
Cardano Founder Sets Stage for the Dawn of the Voltaire Era

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Insha Zia

Insha Zia is a senior journalist at DailyCoin covering crypto developments, especially in the Cardano ecosystem. With a Bachelor of Science in Computer Systems Engineering, he delivers high-quality articles with his technical background and expertise in data analysis and programming languages, aiming to educate and inform readers accurately, transparently, and engagingly. Insha believes education can drive mass adoption of the crypto space, and he is committed to giving DailyCoin readers a better understanding of the technology.