Bitcoin Drops as U.S. Interest Rates are Announced to Rise

10:34 am, Wed, 5 May 21

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The U.S. Treasury Secretary, Janet Yellen, issued a statement according to which there can be a potential rise in the interest rates in the U.S.A. The statement quickly affected the global markets as well as the price of Bitcoin, which dropped below $55,000.

According to Janet Yellen’s statement, the economy has suffered an imbalance due to the COVID-19 Pandemic, which is why the President’s administration aims to increase the interest rates to save the economy.

The global markets, including the digital currency market, were briefly impacted after the statement was issued. The decrease in the price of Bitcoin and other cryptocurrencies is a good opportunity for potential investors to use exchanges such as SwissBorg or Kraken and invest in Bitcoin.

Statement Issued by Janet Yellen

Janet Yellen issued a statement regarding the interest rates in the U.S.A. in a videoconference with The Atlantic:

It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overeat, even though the additional spending is relatively small relative to the size of the economy. So it could cause some very modest increases and interest rates to get that reallocation. But these are investments our economy needs to be competitive and productive.”

According to the U.S. Treasury Secretary some investments will be reallocated and a few policies will be changed, including the increase in interest rates. However, any changes that are to be implemented will be modest.

However, shortly after Janet Yellen made the statement, markets on a global scale took a hit.

Effect of the Statement on Cryptocurrency Market

The statement regarding the increased interest rates not only affected the stock market but also brought down several other cryptocurrencies, apart from Bitcoin. Within two hours, a drop in the digital currency market was observed, which went from $2.3 trillion to $2.1 trillion.

Bitcoin lost $3,500 in 6 hours, which can once again indicate bull fatigue. On the other hand, a drop in the price of several other cryptocurrencies was also noticed.

  • Ethereum dropped down 5.58%
  • XRP went down 10.74%
  • Binance Coin’s price dropped approximately 10%
  • DOT dropped down 6.7%
  • ADA went down 6.38%

Dogecoin was the only major altcoin that went opposite the tide and remained at an amazing 26.35% gains.

How the Other Markets Reacted to the Statement?

The statement issued by Janet Yellen had an impact on all global markets. Following the news of a potential increase in the interest rates, a rapid drop of 1.3% was noted for S&P 500. The index was able to recover to some extent after a while and closed the day with a red candle of 0.67%.

A drop of 1.31% was also observed for the Dow Jones during the day, which was recovered, closing with a 0.06% increase in the last 24 hours.

Shifts in the cryptocurrency market trends can occur as a result of such statements. A drop in the price of Bitcoin and other cryptocurrencies can be a suitable opportunity for people to invest in digital currencies through popular crypto exchanges. People interested in crypto trading can also avail the opportunity and use popular Bybit exchange, whereas, interested parties looking for the opportunity to copy-trade can do so by using exchanges such as PrimeXBT Covesting.