Bitcoin maintains losses as Fed warns about interest rates

Bitcoin declined slightly on Wednesday, continuing the downward trend that began with a sharp liquidation wave earlier this week, while traders continued to assess cautious remarks from Federal Reserve Chair Jerome Powell, with anticipation for the release of key US inflation data.

Bitcoin was last down by 0.2% to trade at $112,790.5 as of 02:11 AM Eastern Time (06:11 GMT), remaining near its lowest levels in two weeks.

Bitcoin holds its losses after liquidation wave… and anticipation of Fed policy

Bitcoin had dropped by nearly 3% on Monday, after about $1.5 billion worth of positions were liquidated in the cryptocurrency market in a single day.

This wave of liquidations was the largest since last March, and it led to forced selling in derivatives markets, causing sharp losses for Ethereum and other altcoins.

The decline was further exacerbated by some traders’ positioning in directional bets through options contracts, which benefit from sharp volatility, according to reports.

This collapse came just days after Bitcoin and other digital assets initially rallied following the Fed’s move to cut interest rates by 25 basis points last week, in the first monetary easing in several months.

But that optimism did not last long, as risk appetite quickly reversed with the cautious tone adopted by the Fed regarding monetary policy outlook.

In his speech, Fed Chair Jerome Powell said the central bank must act cautiously in considering further reductions in borrowing costs. He acknowledged that labor market weakness may allow room for additional easing, but warned that excessive cuts could undermine progress made in fighting inflation.

Attention now turns to the release of the Personal Consumption Expenditures (PCE) price index in the United States, the Fed’s preferred measure of inflation, scheduled for Friday.

Bloomberg: Tether seeks to raise up to $20 billion at $500 billion valuation

Bloomberg reported on Tuesday that Tether, based in El Salvador and issuer of the USDT stablecoin, is in early talks to raise between $15 billion and $20 billion through a private placement, in a deal that could value the company at about $500 billion.

According to the report, the proposed deal would involve the sale of around 3% of the company’s shares.

CEO Paolo Ardoino said on Wednesday that the company is indeed considering raising capital from a group of prominent investors.