Bitcoin BTC +1.14% 's price dipped on Wednesday after the U.S. Federal Reserve kept interest rates at their current level on Wednesday.

The Federal Open Market Committee did what the majority of analysts predicted and held the benchmark federal funds rate in the current range of 5.25%-5.50%. The move marks the first rate pause of 2024.

"The Committee decided to maintain the target range for the federal funds rate at 5.25% to 5.50%," the central bank said in a statement.

Inflation has eased, but still elevated

"Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated," the FOMC statement added.

Referring to the possibility of a rate cut, the Federal Reserve said that "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%."

The world's largest cryptocurrency by market capitalization fell 2.2% over the past 24 hours to $42,701 at 3:56 p.m. ET, according to The Block's Price Page. 

Bitcoin posted a slight price rise after the U.S. Federal Reserve decided to keep rates steady. Image: The Block.

CoinShares Head of Research James Butterfill suggested that as financial institutions increasingly participate in the market through multiple spot bitcoin ETFs, bitcoin will become more responsive to interest rate decisions.

"Bitcoin prices have realigned with futures market interest rate expectations, suggesting that bitcoin will become more responsive to interest rate sensitive macro data, such as payrolls and CPI, especially as the excitement surrounding ETFs diminishes," Butterfill told The Block.

(Updates with bitcoin price data.)