Bitcoin Rises Ahead of Fed Crypto traders ready to push prices higher.
Bitcoin
and other cryptocurrencies rose on Wednesday ahead of the latest monetary policy decision from the Federal Reserve, which traders see as a catalyst that could push prices above key bear market levels.
The price of Bitcoin has risen less than 1% in the past 24 hours to $28,150, holding close to this week’s peak near $28,500, the highest level since last June. Despite a bumpy start to March that saw Bitcoin fall below $20,000, the biggest digital asset has resumed its rally and is up from around $16,500 at the start of the year – a rise that has fueled widespread calls for another bull market.
These talks could come true on Wednesday. Traders have been closely watching the $30,000 level, seen as critical because that’s where prices stood before the crypto crash accelerated last summer with a number of digital asset companies collapsing. A return above $30,000 would signal to investors that the worst of the bear market – with Bitcoin down from a late 2021 peak near $69,000 – is over.
“A break above $28,500 could have a dam-breaking effect and quickly take the price to $30,000. A break below $27,500 would nullify the bullish technical signal and open the way for a deeper correction,” said Alex Kuptsikevich, analyst at broker FxPro. “This is likely to be resolved later … after the Fed decision.”
While traders have cited a laundry list of reasons for Bitcoin’s recent rally — including how a recent banking panic supports the narrative of financial decentralization — the most obvious explanation relates to the Federal Reserve’s monetary policy.
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The failure of several US banks in recent weeks has been linked to losses on bond portfolios – an unintended consequence of the Fed dramatically raising interest rates over the past year in an attempt to curb decades of high inflation. High prices have also hammered crypto prices, as riskier games like Bitcoin are more sensitive to higher yields on risk-free government debt.
While traders had been bracing for the Fed to keep raising interest rates, pressure on banks has caused an abrupt shift in expectations, with most investors seeing the central bank as more accommodative in monetary policy. The Fed is expected to raise interest rates by just a quarter of a percentage point, in line with February’s increase, which itself was a big step down from much larger rate hikes last year.
Bitcoin, which
Dow Jones Industrial Average
and
S&P 500,
will move on the back of the Fed decision. Signs point to crypto raiders being decidedly bullish in the meantime.
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The Crypto Fear and Greed Index rose to 68 out of 100 on Tuesday, indicating greed and marking the most positive level since digital assets hit all-time highs in November 2021. Traders have also piled into bullish plays in the crypto derivatives market . . Bitcoin options volume rose to the highest levels since October 2021 last week, with most positions being calls, or bets that prices will rise, according to Dessislava Aubertan analyst at crypto data provider Kaiko.
“A lot has to go right for this risk increase to continue…many traders are eyeing the $30,000 level for Bitcoin, and depending on how prices react there, momentum flows could support a 5% move in either direction,” said Edward Moya, analyst at the broker Oanda. “If the Fed doesn’t trigger a rally, Bitcoin could settle closer to the $25,000 region.”
Beyond Bitcoin,
Ether
— the second-largest crypto — advanced 2% to near $1,800. Smaller cryptos or altcoins were also higher, with
Cardano
increasing 9% and
Polygon
jumped 3%. Memecoins were also in the green, too
Dogecoin
jumps 5% and
Shiba Inu
gets 3%.
Write to Jack Denton at [email protected]
