In a surprising move that has unsettled both traditional and cryptocurrency markets, the Federal Open Market Committee (FOMC) convened its fourth policy meeting of the year on June 12 and opted to maintain interest rates unchanged within the range of 5.25% to 5.5%.

This unexpected decision had an immediate impact on the crypto sector, causing Bitcoin to drop sharply from $70,000 to $66,000, with Ethereum experiencing a similar downturn. The FOMC's decision to refrain from rate cuts, despite prior indications of potential reductions, heightened market volatility, resulting in nearly $400 million in liquidations and shaking investor confidence across various asset classes.

Federal Reserve Chair Jerome Powell emphasized that while progress has been made in addressing inflation, the central bank remains hesitant to ease its current monetary stance. Powell's cautious approach underscores the Fed's commitment to maintaining its 2% inflation target, warning that premature rate cuts could undermine the progress achieved thus far.

Following the FOMC's announcement, Bitcoin, which had surged to $70,500 earlier, fell to $67,220, while Ethereum dropped from over $3,700 to $3,400. This downturn extended to other cryptocurrencies like Cardano, Solana, and Ripple, each experiencing declines of at least 8%.

In response to these market movements, approximately $400 million worth of cryptocurrency assets were liquidated over the past two days, highlighting heightened market volatility and investor anxiety. Additionally, US spot Bitcoin ETFs saw net outflows of $200 million, ending a 19-day streak of net inflows.

Despite a brief uptick in sentiment following the release of the US Consumer Price Index (CPI) report, which showed a May year-over-year inflation rate of 3.3%—slightly lower than the expected 3.4%—the crypto market quickly reverted to its initial levels. This reaction underscores persistent investor uncertainty amidst ongoing economic uncertainties.

While the US maintains its cautious stance on interest rates, other economic regions like the European Union and Canada have opted for rate cuts to address their own inflationary pressures. These divergent economic strategies reflect varying economic conditions and policy preferences across global markets.

In the US, a recent survey by Grayscale indicates that 41% of respondents are increasingly focusing on Bitcoin due to the country's persistent inflation concerns. This growing interest in cryptocurrencies underscores heightened public scrutiny of traditional economic policies and a growing search for alternative investment opportunities amid high inflationary environments.