Bitcoin Holds Firm Above $28,000, Stocks Rise Amid Banking Decline
Bitcoin (BTC) climbed past $28,000 on Tuesday as the US Federal Reserve’s Federal Open Market Committee (FOMC) began its two-day monetary policy meeting to decide whether to raise interest rates again.
The CME FedWatch Tool currently shows that over 87% of traders are predicting a 25 basis point (bps) rate hike on Wednesday, which would put the federal funds target rate range at between 4.75% and 5%.
BTC, the largest cryptocurrency by market cap, was recently trading at around $28,050, roughly flat over the past 24 hours, although a brief midday bounce saw the BTC/US dollar trading pair reach as high as $28,605 on crypto exchange Coinbase – the highest point since June, data from TradingView showed.
“Risk appetite is rising with optimism that the Fed is almost done tightening and that they will help prevent financial stability concerns from getting out of hand,” Edward Moya, senior market analyst at forex market maker Oanda, wrote in a Tuesday note.
Bitcoin is up more than 15% in the past seven days and 69% so far this year. A Galaxy Research report on Monday noted that on a risk-adjusted basis, BTC outperformed a number of securities, indices and commodity assets and is 2023’s top asset.
Traditional markets also turned green amid a bank rally and increased investor optimism. The S&P 500 closed up 1.3 percent. The technology-heavy Nasdaq and Dow Jones Industrial Average (DJIA) rose 1.5% and 0.9% respectively.
Regional bank shares rallied amid at least a temporary easing of investor fears about banking sector stability. Shares of First Republic Bank ( FRC ) closed up 29% following a Wall Street Journal report that JPMorgan CEO Jamie Dimon was working with other bankers to stabilize the troubled California-based institution. On Monday, First Republic Bank’s stock fell 47% and was downgraded for the second time in a week by S&P Global. Shares of Western Alliance Bancorporation ( WAL ) and Truist Financial Corp ( TFC ) rose nearly 15% and 9%, respectively.
Beniamin Mincu, CEO of MultiversX, said that in stressful times like the current banking meltdown, more people can “turn to viable alternatives that really exist.”
“It is precisely in this kind of crisis that the necessities of a new type of money that is digital, fast, secure, transparent and accessible to everyone in the world becomes clear,” Mincu told CoinDesk via a Telegram message.
Still, James Lavish, managing partner of the Bitcoin Opportunity Fund, doesn’t think investors are ready to treat bitcoin as a safety net.
“In reality, bitcoin continues to trade as a leading risk-on asset,” Lavish told CoinDesk in an email.
With many observers taking heart from UBS’s purchase of troubled rival Credit Suisse on Monday for $3.2 billion and a potential dovetailing by the Fed, “this has stopped a ton of shorts” of BTC and the price has “benefited ,” he added. .
Singapore-based crypto-options trading firm QCP Capital wrote in a Telegram broadcast on Tuesday that if the Fed “declines to market prices and starts predicting cuts this year,” stocks and crypto will “certainly continue the rally.”
“However, if they stick to their guns, trust their ring-fencing to take care of the liquidity issue and choose to ignore potential credit issues to come, then we will likely see a premature top to this BTC rally tomorrow,” QCP added Capital to .
Ether (ETH), the second-largest cryptocurrency by market capitalization, rose nearly 2% to recently trade near $1,795. The CoinDesk Market Index, which measures the overall performance of the crypto market, was up 1.8% for the day.
