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What happened

The price of several cryptocurrencies fell today after the Federal Reserve left interest rates unchanged at the conclusion of its June meeting yesterday but indicated that more rate hikes could be coming later this year.

Since late afternoon yesterday, the price of the world's largest cryptocurrency, Bitcoin (CRYPTO:BTC), traded roughly 2% lower as of 11:11 a.m. ET today, although had been down as much as 3.8% over the last 24 hours.

Meanwhile, the price of the world's second-largest cryptocurrency, Ethereum (CRYPTO:ETH), traded 2.2% lower but had been down close to 6%, while the price of the meme token Shiba Inu (CRYPTO:SHIB) was down about 0.6% after having been down as much as 4%.

Crypto largely seems to be moving overall after the Fed left interest rates unchanged for the first time since March 2022. While this was expected, the Fed then spooked the market, indicating that it expects there to potentially be two more rate hikes this year and that a rate cut could be far away.

Fed Chair Jerome Powell said after the Fed's meeting:

It will be appropriate to cut rates at such time, as inflation is coming down really significantly. And again, we're talking about a couple of years out. As anyone can see, not a single person on the committee wrote down a rate cut this year, nor do I think it is at all likely to be appropriate.

As many will remember, rising interest rates crushed the likes of Bitcoin and the crypto market in 2022, so the thought of the Fed not pausing is bound to worry crypto investors.

"Once the penny dropped that more hikes are likely and we're in a higher-for-longer rates environment, Bitcoin lost its hold," said Nexo managing partner Antoni Trenchev, according to Barron's. "Bitcoin is nervously looking at the low $20,000s. It'll be a while before this torrid time for crypto blows over."

Still, the market isn't necessarily buying the Fed's story. According toCME Group's FedWatch tool, the bulk of traders are betting that the Fed will raise interest rates at its next meeting in July. But if you look out to December, traders are split on interest rates ending the year where they are now, between 5% and 5.25%, or a quarter-point higher.

I would agree with the market that there is a long way to go before the Fed does two more rate hikes this year, but it still could happen, so it can't be ruled out.

It's going to depend on the data. As the Consumer Price Index numbers demonstrated earlier this month, some parts of the economy are still running hot, as prices for shelter, transportation services, used cars, and even food bounced a little bit in May. The Fed may look for some of these prices to soften as well as for further cracks in the labor market before it can declare victory in its war with inflation, which means the data going forward is going to be very important.

Ultimately, I still think it's worthwhile having some exposure to Bitcoin and Ethereum, which I think will be here for the long haul. I continue to have no interest in Shiba Inu.

Bram Berkowitz has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool recommends CME Group. The Motley Fool has a disclosure policy.

See more here:

Why Bitcoin, Ethereum, and Shiba Inu Are Falling Today - The Motley Fool