font size
Bitcoin rose earlier this year, but there are reasons to think the rise could be unsustainable.
dream time
and other cryptocurrencies have risen with other risk assets since Wednesday The Federal Reserve has raised interest rates by a quarter of a percentage point.
Again, this is a rate hike, but the pace of tightening financial conditions has slowed markedly after last year’s series of significant rate hikes. The Fed also reiterated its prediction that he will at least double the rate hike.
Markets rose during Fed Chairman Jerome Powell’s question-and-answer session with reporters, in which Powell said inflation had fallen sharply so far, decision to raise rates further Depends on incoming economic data.
Bitcoin’s price has risen about 1.5% over the past 24 hours, hovering around $23,400.largest digital asset at the start of this year, increased by 40% as crypto benefited from an improvement in investor appetite for risk. Bitcoin remains just one-third of its late 2021 highs, but traders are growing more optimistic. Brutal bear market bottom It has already taken a hit. FTX shock bankruptcy In November — and that crypto is poised to march higher.
“Crypto fundamentals are on the back foot here, with the overall appetite for risky assets being the main driver,” said Edward Moya, an analyst at broker Oanda. “Bitcoin appears to have significant resistance at the $24,000 level, so a consolidation towards $20,000 is possible if the rally stalls after the earnings fireworks of the Federal Reserve and Megacap tech. there is potential.”
Earnings from Wednesday indeed
meta platform
(Ticker: META)—And Peers
apple
(AAPL),
alphabet
(GOOGL), and
Amazon.co.jp
(AMZN) Thursday — Tech sentiment will take a hit, likely leaking to cryptocurrencies.
But the spotlight is on the FedDecades of high inflation and rising interest rates have been key headwinds for Bitcoin over the past year, with cryptocurrencies appearing to correlate more with equities against an unfavorable macro backdrop for risk-sensitive assets. has become Investors hope the worst is over.
In its statement accompanying the rate hike, the Fed kept wording that it expects the target range for the federal funds rate to “continue to rise.” The statement removed language suggesting that the coronavirus pandemic and events in Ukraine contributed to inflationary pressures.
Importantly, Powell said in remarks to reporters that he believes markets are already reflecting significantly tightened financial conditions. We attribute the market’s interest rate expectations of 0 to investors’ optimism about how quickly inflation could fall.
As for digital tokens and other risky assets, it led to a significant rally as Chairman Powell said. Besides Bitcoin, etherThe second largest cryptocurrency has risen nearly 2% over the past 24 hours to $1,619.50.small token Cardano and polygon Following the Fed’s announcement, stocks rose 5% and 10% respectively after falling the day before.
Recent Crypto Rise Most appear to be built on sand, Bitcoin’s eye-popping jump is fueled by low liquidity and technological factors such as short squeezes that push prices rather than organic demand.The same trend that helped push prices up Potential to accelerate significant sales.
Write to Jack Denton at [email protected]
