In June, the U.S. Federal Reserve said inflation had shown signs of easing but remained above its 2% target range, according to minutes released on Wednesday.

U.S. economic activity has continued to expand at a solid pace, though growth in Real Gross Domestic Product for the year is expected to be below the strong pace recorded in 2023.

Declining inflation is desirable for risk assets, including Bitcoin, as it would give the Fed confidence to begin lowering interest rates this year — effectively making the cost of borrowing cheaper.

In the short term, crypto prices may continue to feel the pinch resulting from a high inflationary environment.

Spot price action for bellwether asset Bitcoin appears to be "running out of steam" following this year's exchange-traded fund euphoria, Jonathan de Wet, chief investment officer at digital asset trading firm Zerocap, told Decrypt.

"FOMC minutes released after the close didn't help already fragile sentiment, with divided Fed officials noting that the U.S. economy was cooling and that several participants said if inflation were to persist at an elevated level or rise further, the funds rate might need to be raised," de Wet said.

While the labor market remains strong, with job gains continuing, there are signs of reduced tightness in labor market conditions, the Fed said.

That would provide additional ammunition for the central bank to lower rates in the coming months, provided the trend remains steady. 

Indicators, such as the declining job openings rate and lower hiring rate, point to a reduced degree of labor market tightness.

The Fed decided to maintain the target range for the federal funds rate at 5.25% to 5.50% last month, which was largely expected by market participants. 

Futures traders are forecasting two rate cuts this year, according to CME’s FedWatch Tool. That would largely depend on a loosening of monetary policy by the U.S. central bank.

In June, Fed members discussed various risks, including potential downside risks to economic activity and the possibility of inflation remaining elevated due to geopolitical developments and trade tensions, among other factors, the minutes show.

The European Central Bank and the Bank of Canada have initiated rate-cutting cycles, and most advanced-economy central banks are expected to begin easing policy within the next several months.

It comes as the price of Bitcoin took a hit Wednesday, dipping to its lowest point in two months, below $58,000. Liquidations in the crypto market have also begun piling, reaching as much as $240 million at the time of writing, CoinGlass data shows.

"A further breakdown here in spot would see the express elevator down to $52,000 in our mind," de Wet said.