Bitcoin Holds Above $20K Ahead of Fed Rate Decision
by James · November 1, 2022
Bitcoin and the broader crypto market continued to trade correlated with risk assets on Tuesday ahead of the Federal Reserve’s interest rate decision tomorrow.
The largest cryptocurrency by market capitalization ever rose 0.2% at the time of writing, trading at $20,414, according to CoinGecko.
And Ethereum, the second largest cryptocurrency by market capitalization, was priced at $1,579 – a 0.6% daily gain.
US stocks, on the other hand, had a difficult trading day: all Wall Street’s major indexes fell news that the labor market was strong – which could lead to the Fed continuing to raise interest rates. This is because low unemployment usually means that people spend more, which causes prices to rise.
But Chinese stocks listed in the US had a brilliant day of trade after social media posts claimed the country’s government may ease its strict COVID-19 lockdowns.
Central banks around the world have raised interest rates to control rising prices. The Fed has been particularly eager to get inflation under control because it is at a four-decade high. Investors have therefore avoided so-called risk assets such as shares and Bitcoin.
Bitcoin and crypto have typically been closely correlated with US stocks—especially technology stocks. More recently, however, Bitcoin has proven somewhat more resistant to larger macroeconomic trends, leading to questions about whether the asset has “decoupled” from equities.
The Federal Reserve will announce its latest interest rate decision tomorrow. It was expected to slow the particularly aggressive monetary policy it has used this year to tame inflation – but today’s figures show that those expectations may be misplaced.
“With markets shifting expectations towards a dovish outcome at the upcoming meeting, we are concerned about a negative market reaction to continued Fed hawkishness,” said Singapore-based crypto investment firm QCP Capital’s Darius Sit Decrypt.
While other cryptocurrencies haven’t moved too much today, Dogecoin has continued to stand out among the largest crypto assets by market capitalization.
The original meme coin has risen 7.2% in 24 hours, trading at $0.13. It has also jumped 132.4% over the past seven days, making it the best performing digital asset in a week.
This is mainly because Twitter’s new CEO Elon Musk has continued to post Dogecoin-related memes on the social media platform, leading to renewed interest in the coin – the eighth largest digital asset by market capitalization.
