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Bitcoin tanks after Fed chair Powell said interest rate cuts in 2023 are not likely 

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Bitcoin fell Wednesday after the Federal Reserve raised its key interest rate by a quarter of a percentage point, as widely expected, while the Fed chairman Jerome Powell said it’s “the most likely case” that the central bank would refrain from cutting its key interest rate this year. 

The largest cryptocurrency
BTCUSD,
-0.09%

dropped 4% over the past 24 hours to as low as $26,685 Wednesday, according to CoinDesk data. 

The pullback came after bitcoin rallied almost 50% in less than two weeks, as three regional U.S. banks collapsed and the Fed announced an emergency loan program to backstop depositors at the institutions and across the whole banking system. 

The stress in the banking sector prompted some investors to expect that the U.S. central bank would start cutting its key interest rate soon. However, Powell’s comments on Wednesday dashed such hope, noted Michael Safai, founding partner at Dexterity Capital. It has thus weakened some of the momentum that led to bitcoin’s rise in recent days, said Safai.

Still, bitcoin’s earlier rally also happened as investors sought diversification from bank deposits and as the Fed injected liquidity into the financial system, Peter Eberle, chief investment officer at Castle Funds, said in a call.

The ongoing weakness in the banking system and the potential for increases in central bank balance sheets haven’t disappeared completely, Safai said in emailed comments. “This could provide a floor for cryptocurrencies once the broader institutional reaction to the Fed settles down,” according to Safai.

Major stock indexes also traded lower Wednesday, with the Dow Jones Industrial Average
DJIA,
-1.63%

closed down 1.6%. The S&P 500
SPX,
-1.65%

finished 1.7% lower and the Nasdaq Composite
COMP,
-1.60%

dropped 1.6%.

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Jacob Keiter is a husband, a writer, a journalist, a musician, and a business owner. His journey to becoming a writer was one that was paved with challenges, but ultimately led him to find his true calling. Jacob's early years were marked by a strong desire for creative expression. He was always drawn to music, and in his youth, he played in several bands, chasing the elusive promise of fame and success. However, despite his best efforts, Jacob struggled to find the recognition he craved. It wasn't until he hit a low point in his life that Jacob discovered his love for writing. He turned to writing as a form of therapy during a particularly difficult time, and found that it not only helped him to cope with his struggles, but also allowed him to express himself in a way that he had never been able to before. Jacob's writing skills quickly caught the attention of others, and he soon found himself working as a journalist for The Sun out of Hummelstown. From there, he went on to contribute to a variety of publications, including the American Bee Journal and Referee Magazine. Jacob's writing style is reflective of traditional journalism, but he also infuses his work with a unique voice that sets him apart from others in his field. Despite his success as a writer, Jacob also owns another business, JJ Auto & Home, which specializes in cleaning. Jacob's commitment to excellence is evident in all of his endeavors, whether it be in his writing or in his business ventures. Today, Jacob is the author of two books and continues to inspire others through his writing. His journey to becoming a writer serves as a reminder that sometimes our darkest moments can lead us to our greatest achievements.

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