Bitcoin tumbled to a two-month low of around US$57,000 after Federal Reserve chairman Jerome Powell remarked that interest rates are likely to stay higher for longer as the central bank tries to stamp out stubborn inflation.
The cryptocurrency has shed more than 4% in two days, following a near 16% plunge in April, the worst monthly drop since the FTX digital asset exchange imploded in November 2022.
The most popular digital asset hit a record high of almost $74,000 in mid-March after the US Securities and Exchange Commission endorsed spot Bitcoin exchange-traded funds at the beginning of this year.
According to Coindesk, the Bitcoin price bounced modestly following the news, but remains under pressure, down more than 4% for the session at $58,000.
The token slid as the Fed reiterated its plans to hold rates steady, a move that increases treasury yields and the dollar, but pressures high-risk assets such as cryptocurrency, stocks and gold.
Overnight, the central bank's Federal Open Market Committee voted to keep its benchmark interest rate in a range of 5.25-5.50%, a 23-year high.
The fed funds rate has been in this range since July 2023.
"The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%," said the Fed statement.
Mr Powell also soothed markets by making it clear at the end of the two-day meeting that "it is unlikely the next policy move will be a hike".
Most stock exchanges were flat following the news, while the dollar and bond yields were slightly lower.
Gold fell by $20 to slightly above $2,300 per ounce, down 4% from its record high near $2,400 in mid-April.
The baht strengthened slightly on Thursday to 37.00 to the US dollar.
Rakpong Chaisuparakul, senior vice-president at KGI Securities (Thailand), said the Fed's decision should be slightly positive for risk assets.
"Mr Powell, while reiterating inflation is declining too slowly, also ruled out a rate hike in the near future," he said.
The Fed also adjusted its pace of quantitative tightening by reducing the monthly redemption cap on treasury securities from $60 billion to $25 billion.
Asia Plus Securities (ASPS) said the Fed's decision is in line with the market forecast.
"The Fed was expected to keep the interest rate high longer," said the brokerage, adding that Fed Watch Tool expects the central bank to start cutting rates in November, later than the initial forecast of September.
The reduction of the redemption cap on treasury securities, which starts from June 2024, may help risk assets including stocks, noted ASPS.