Bitcoin and other cryptocurrencies moved higher yesterday as investors seem to be turning their attention to high-risk investments. However, traders seem to be waiting for the important Federal Reserve interest rate meeting today to predict which way cryptocurrencies will move.
In the last 24 hours, the price of Bitcoin strengthened by 1% to $20,550. The largest cryptocurrency in existence broke the $20,000 barrier last week, coming out of the $19,000 to $20,000 range for the first time since early September.
Still, the price of Bitcoin remains at one-third of its value from its historic highs a year ago and is far from the $30,000 support point, which it lost last July amid a dramatic sell-off.
Experts wonder whether today’s Fed decision will change the course of Bitcoin, whose price has been hovering in the $20,000 region, constantly finding support either on the downside or on the upside.
As they say, the fate of cryptocurrency has recently been more related to the movement of the Dow Jones Industrial Average and the S&P 500, due to the macroeconomic climate that has prevailed with high inflation, rising interest rates and recession risks.
At the same time, the Fed’s aggressive policy of tightening economic conditions and proceeding with a series of interest rate hikes has increased pressure on cryptocurrencies as high interest rates reduce demand for high-risk investments such as Bitcoin and several stocks.
This is why today’s Fed decision is very important for this market. The Federal Reserve is expected to deliver another huge 75 basis point rate hike, but traders are hoping that the announcement will be accompanied by a prediction that interest rate policy will begin to ease in the near future.
If there are signs of easing from the Fed, this will give a boost to cryptocurrencies, but otherwise, things will be much more difficult.
Still, Bitcoin’s ability to hold in the $19,000 to $20,000 range for so long – and amidst sharp fluctuations in the markets – shows strength in the cryptocurrency market.
Beyond Bitcoin, Ether – the second largest cryptocurrency – rose less than 1% slightly below $1,600, while other cryptocurrencies were mixed, with Solana down 2% and Cardano up 1%.
Dogecoin gained 29%, mainly because Elon Musk has been mentioned it. With the acquisition of Twitter, investors believe that the billionaire entrepreneur will give it a new lease of life.
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