Bitcoin briefly drops below $25,000, Tether falls under dollar peg

Cryptocurrency prices fell after the Federal Reserve’s June meeting, with bitcoin falling below $25,000 for the first time since March.

On Thursday, bitcoin was lower by more than 1% at $25,439.77, according to Coin Metrics. Earlier, it fell as low as $24,766.52. Ether fell more than 3% to $1,667.56.

Altcoins tumbled too. Solana’s token was down 2.3%, Polygon’s fell 8.3% and Cardano’s lost %3.5.

And selling pressure weighed on Tether (USDT), which lost its peg to the U.S. dollar on most exchanges Thursday, falling to 99 cents in its biggest drop since November.

Bitcoin cut most of its Thursday morning losses in the afternoon as traders mulled the possibility of the first spot bitcoin ETF in the U.S., following a CoinDesk report that BlackRock, the world’s largest asset manager, is close to filing an application for a bitcoin ETF. The report was light on detail, however, and didn’t specify how it would get exposure — whether by tracking spot bitcoin or bitcoin futures.

The initial slide began late Wednesday, after the Federal Reserve ended its June meeting and decided to leave interest rates unchanged for now, but said two more may be in store by yearend.

For cryptocurrencies, “this has little to do with the FOMC, and more to do with thinner liquidity and weak sentiment,” said Michael Safai, managing partner at Dexterity Capital. “Given how thin trading volumes are at the moment, a sizable (but not massive) sell order is enough to set off liquidations.”

“Traders are more inclined to keep their money off the table in the midst of this regulatory backlash, especially when it comes to altcoins, so there isn’t going to be much new capital flowing in to buoy prices so readily,” he added.

Price action has been tepid this week while sentiment has been negative after the Securities and Exchange Commission put a chill on the industry by suing Coinbase and Binance and called into question the regulatory status of several popular coins it deemed “crypto asset securities.” That was the latest development in an ongoing crackdown by regulators that’s weighed on the industry since the start of the year.

“Further confusion about the legality of popular altcoins is keeping capital on the sidelines, and it’ll take a long run of good news or no news to get traders feeling excited about a recovery,” Safai said. “Bitcoin prices will stay relatively rangebound between $25,000 and $27,000 until the next set of regulatory headlines tell us whether we’re heading towards resolution or even more obfuscation.”