The cryptocurrency market experienced a sharp downturn late Thursday, reversing earlier stability, as traders digested a complex mix of macroeconomic signals and renewed geopolitical tensions. Bitcoin (BTC), after initially holding its ground following the Federal Reserve's policy announcement, succumbed to selling pressure, highlighting the market's sensitivity to broader risk sentiment. The BTCUSDT pair registered a 24-hour low of $106,781.09, breaking below the psychological $107,000 level and indicating a shift in momentum. The decline was even more pronounced in the altcoin market, where major tokens like Ethereum (ETH), Solana (SOL), and Litecoin (LTC) saw significant losses. LTCUSDT, for instance, dropped over 2% to trade around $85.01, while SOLUSDT struggled to hold the $150 support line, hitting a low of $149.70 before a slight recovery.

Fed's Hawkish Pause and Economic Realities

The market's unease began to build following the U.S. Federal Reserve's decision to leave benchmark interest rates unchanged. While the move was widely anticipated, the accompanying economic projections sent a hawkish signal to the markets. According to the official statement and the subsequent dot plot, Fed policymakers now anticipate only one 25-basis-point rate cut this year, a significant reduction from the multiple cuts forecasted in March. Furthermore, they revised their inflation forecasts upward, with Personal Consumption Expenditures (PCE) inflation now expected to be stickier than previously thought. This stance creates a challenging environment for risk assets like cryptocurrencies, which typically thrive on expectations of lower interest rates and increased liquidity. The initial market reaction was deceptively calm, with Bitcoin hovering near its session highs, but the underlying hawkish tone from the Fed likely set the stage for the subsequent sell-off.

Geopolitical Jitters and Weakening Data

Compounding the Fed's hawkish outlook were renewed geopolitical fears and signs of a weakening U.S. economy. According to reports from The Kobeissi Letter, escalating tensions in the Middle East and concerns over international trade disputes weighed heavily on investor sentiment. While traditional equity markets managed to shrug off these concerns and close with minor gains, the more speculative crypto market proved less resilient. Simultaneously, fresh economic data painted a concerning picture. The Producer Price Index (PPI) for May came in softer than expected, and initial jobless claims unexpectedly rose, matching a multi-month high. Continuing jobless claims also climbed to their highest level since November 2021. This combination of slowing economic activity and persistent inflation—stagflation—is a particularly bearish scenario that leaves the Fed with little room to maneuver and increases uncertainty for traders.

Key Trading Levels and Cross-Pair Analysis

From a technical standpoint, Bitcoin's price action reveals critical levels for traders to watch. The rejection from the 24-hour high of $108,746.16 on the BTCUSDT pair establishes a formidable resistance zone. A failure to reclaim this level could see sellers push the price towards deeper support. The immediate support is the 24-hour low around $106,780. A decisive break below this could open the door to a test of the $105,000 psychological level. Interestingly, the ETH/BTC pair showed relative strength, climbing 0.929% to 0.02282. This suggests that during this specific downturn, some capital may have rotated from BTC to ETH, or that ETH simply sold off less aggressively than Bitcoin. In contrast, the SOL/BTC pair fell by 0.595%, indicating Solana's relative weakness against the market leader. Trading volumes provide further insight; the XRPUSDT pair saw substantial volume of over 156,000, coinciding with its price drop, confirming strong selling interest. Traders should closely monitor these cross-pair dynamics as they often provide early signals of shifting market sentiment and capital flows.