Bitcoin traded down on Thursday, unable to sustain the upward momentum that followed the Federal Reserve’s Wednesday comments.

The world’s leading cryptocurrency surged by as much as 7 per cent after the world’s most influential central bank raised its growth forecast for the US economy, committed itself to continued bond purchases of at least $120bn a month and indicated it would not raise interest rates until 2023 at the earliest.

The Fed also conceded that inflation will most likely run above its target of 2 per cent for the foreseeable future, with core inflation for 2021 coming in between 2.2 and 2.4 per cent.

Such concessions, coupled with President Joe Biden’s recent $1.9trn stimulus package, have increased inflation anxieties, both with regard to asset prices and the wider economy.

In his press conference following the two-day policy meeting, Fed chair Jerome Powell argued that in the past decade of economic expansion and very low rates: “We didn’t see excess build-up of debt, we didn’t see asset prices forming into bubbles that would threaten the progress of the economy, we didn’t see a housing bubble.”

He added: “The connection between low rates and financial instability is just not as tight as people think it is.”

Whether Bitcoin’s Wednesday afternoon rise can be attributed to investors’ and traders’ confidence being boosted by such optimism or rushing to a potential hedge wracked with inflation worries is debatable.

Bitcoin’s Thursday reversal, however, can be attributed with some confidence to the knock to investor sentiment delivered by the US bond market. The yield on 10-year Treasury bonds jumped by almost 10 basis points, pushing it above 1.7 per cent for the first time in 14 months.

Having reached as high as $59,412, Bitcoin stood at $58,107 by mid-afternoon trading.

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