Bitcoin starts May with a downward spiral, sliding to below $60K mark (BTC-USD)

Bitcoin (BTC-USD) kicked off the month of May on a poor note, sliding to its lowest level seen in more than two months, driven in part by a deteriorating macroeconomic backdrop as the Federal Reserve continued to hold interest rates higher for longer as it grapples with sticky inflation.

The largest digital token by market cap (BTC-USD) dropped to as low as $56.6K, before paring losses to $58.6K at 2:49 p.m. ET. At the beginning of the week, by comparison, bitcoin was changing hands at $62.5K. The highest-profile cryptocurrency recorded in March its worst monthly retreat since November 2022, when the crypto market topped out and subsequently entered a bear market.

Ether (ETH-USD), too, suffered a slump early in the session, but has since crept up to positive territory. At the time of writing, ETH edged up 0.8% to $2.99K.

Some of the intraday relief came after the U.S. central bank held rates steady for a sixth straight meeting, as widely expected, and decided to ease its quantitative tightening by slowing the pace of its balance sheet runoff.

The Fed kept its statement that it “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%.”

Standard Chartered analyst Geoff Kendrick took note of liquidity measures in the U.S. that have been waning in recent months, noting such a development bodes poorly “for assets like crypto that thrive on liquidity.”

“Of course liquidity matters when it matters, but with a backdrop of strong US inflation data and less likelihood of Fed rate cuts it matters at the moment,” he wrote in a note.