The past 24 hours have been a volatile roller coaster for Bitcoin.

The BTC price spiked after the Consumer Price Index (CPI) print came in better than expected right before markets opened in the U.S. The rally, however, was short-lived, as Bitcoin’s price tumbled after commentary from Fed Chair Jerome Powell.

At the time of writing, the Bitcoin price has settled at $67,350—about 0.7% lower than it was this time yesterday, according to CoinGecko data.

On Wednesday, Bitcoin’s price rallied to $69,945 from $67,385, an increase of 3.8%, after the CPI data came in at 3.3%—0.1% lower than what analysts had predicted. But then BTC dipped to $66,997, a decrease of 4.5%, after Powell said during his press conference that the Federal Reserve might only cut rates once this year.

Powell noted that the central bank will not cut interest rates if the Federal Open Markets Committee (FOMC) does not have confidence in CPI inflation lowering towards the target rate of 2%.

Earlier this year, the dot plot—a collection of forecasts by the Fed presidents and governors—indicated that the Federal Reserve had anticipated three rate cuts by the end of the year.

Market participants are broadly expecting a 25 basis points rate cut during the September FOMC meeting, with nearly 43% of participants expecting another 25 bps cut following the December FOMC meeting, according to the CME FedWatch Tool.

Interest rates play a key role in the price action of risk assets like cryptocurrencies and the equities market. A lower rate of interest increases the liquidity in the system, as the cost of borrowing capital is lower and investors seek higher returns on their capital due to fixed-income assets offering lower returns.

Interestingly, a trio of U.S. senators, spearheaded by Sen. Elizabeth Warren (D-MA), wrote a letter to Jerome Powell on June 10 asking that the Fed lower interest rates. The lawmakers claimed that high interest rates have now started hurting the U.S. economy.

“You have kept interest rates too high for too long: it is time to cut rates.” they said in the letter.

In a note shared with Decrypt, Leena ElDeeb, Research Associate at 21Shares, stated that the Federal Reserve might have to cut interest rates soon due to a variety of reasons.

According to the note, the Federal Reserve’s target rate of 2% might have to be revised, as high interest rates are doing more harm than good to the U.S. economy. Both the Canadian central bank and the European central bank have lowered interest rates, which can bolster the Federal Reserve’s ability to revise its target.

Further, high interest rates are straining the U.S. banking system.

“63 banks are declared to have $517B in unrealized losses, which increased by $39B in the first quarter. This data by the FDIC could also influence the Federal Reserve to cut rates soon,” ElDeeb said.

Edited by Stacy Elliott.

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