After more than a year of raising interest rates at every meeting, the Fed earlier today kept its policy rate unchanged at its target rate of 5% to 5.25%.
Bitcoin and Ether, the two largest digital assets, have fallen sharply following this news. BTC fell more than 3% and ETH fell 5%.
Widespread selling occurred about two hours after the rate decision.
Few were surprised by the Fed's choice to maintain current interest rates. The Chicago Mercantile Exchange's FedWatch tool, which attempts to predict Fed moves using federal funds futures prices, showed a 98% chance of a decision being suspended.
Two more hikes in 2023
Notably, the central bank's latest economic forecast summary shows that interest rates will peak at 5.6% in 2023, above current levels. Assuming a 25 basis point rate hike, this suggests that Fed officials expect two more hikes in 2023.
With inflation falling, the Fed likely stopped intervening. The Consumer Price Index (CPI), a key measure of inflation, has been declining year-on-year since peaking at just over 9% in June 2022. Year-over-year inflation was 4%, the lowest level since March 2021, according to data released June 13 by the Bureau of Labor Statistics.
The Fed's next meeting is in late July, and the FedWatch tool projects a 61% chance of a 0.25% rate hike at that meeting.
UNI rallies, CRV falls
Outside of the two major digital assets, there was significant movement in DeFi tokens. Following the release of Uniswap Labs, UNI, the token of Uniswap, a leading decentralized exchange (DEX) by volume, rose nearly 3% in the past 24 hours. His fourth code of exchange on June 13th.
Another major DeFi token didn’t fare as well. CRV is used as a yield booster and governance for his popular DEX, Curve Finance, which has fallen over 12%. Risk management firm Gauntlet raised concerns about the founder's heavily leveraged CRV position in Aave.
APE, the token that is positioned as the cornerstone of the ecosystem surrounding Bored Apes and other Yuga Labs NFTs, is also trending lower, hitting an all-time low of $2.05 today, and reaching an all-time high of $26 in April 2022. It has fallen more than 90% since then. .
