The price of
and other cryptocurrencies consolidated gains notched over the past day as the digital asset space was boosted by signals that the Federal Reserve will fight inflation without the use of mega-sized interest-rate increases.
Bitcoin rose 1.5% over the past 24 hours to around $ 39,500, having scored a near 6% daily gain on Wednesday, its biggest one-day jump since early March. The leading crypto has been trading in a range around $ 40,000 for much of this year , remaining well off its all-time high of $ 68,990 reached in November 2021.
“The The [Fed] … Saved Bitcoin’s bacon, ”said Jeffrey Halley, an analyst at broker Oanda. The crypto had been“ threatening a major downside technical breakout earlier in the day, ”he said, before the central bank announced its decision to raise interest rates and Fed Chair Jerome Powell gave a press conference.
“The price action overnight is suggestive of positioning, something I have been telegraphing the last few days, as opposed to a structural change in sentiment,” Halley added.
Ether, the second-largest digital asset, rose 3% to above $ 2,900. The token underpinning the Ethereum blockchain network had a one-day gain of 6% on Wednesday, its biggest daily increase since February.
Smaller cryptos, or “altcoins,” were outperforming.
jumped 8%, and Avalanche increased 7%. “Memecoins” — called that because they were initially intended as internet jokes rather than significant blockchain projects — were a bit more muted, with both
some 2% higher.
Bitcoin and other digital assets should in theory trade independently of mainstream financial markets, but they have proved correlated with other risk-sensitive assets like stocks — especially technology stocks — over the past few months.
Rally in digital asset prices follows one of the best days for the stock market in two years, with the
S & P 500
notching its best one-day performance since May 2020 on Wednesday, rising 3%. While stock-index futures were slipping back on Thursday, cryptos were holding onto their gains.
Upbeat sentiment among investors in “risk assets” like cryptos and stocks came after the Federal Reserve said Wednesday that it would raise interest rates by a half-point and that more increases of a similar size were on the table. Markets were expecting that, and investors have welcomed the Fed’s plan to fight historically high inflation with interest-rate hikes and the reduction of its balance sheet.
In a press conference, Powell also said the central bank wasn’t considering a mega-sized 75 basis-point rate hike — a move investors had feared — providing more ammo for Wednesday’s rally in stocks and cryptos.
“I think the result of this clarity will allow the crypto market to rally in the short-term,” said Marcus Sotiriou, an analyst at digital asset broker Global Block.
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