January Fed meeting minutes pull Bitcoin back from six-month high
The past week was a mixed bag for cryptocurrency investors. Bitcoin hit a six-week high of $25,047 on Tuesday. But soon after the Federal Reserve released the minutes of its January meeting, prices fell below $24,000.
The minutes said members believe “ongoing” rate hikes will be necessary.
“Participants noted that inflation data received over the past three months showed a welcome reduction in the monthly pace of price increases, but stressed that significantly more evidence of progress across a wider range of prices would be required to be confident that inflation was on a sustained downward path.” , it was stated in the report.
“After the rally and underwhelming January minutes, Bitcoin fell further to the $23,600 level on Wednesday,” said Alankar Saxena, CTO and co-founder of crypto management company Mudrex. On Friday, Bitcoin traded at $23,851, according to coinmarketcap.
Ethereum, on the other hand, has proven to be more robust this year. It has traded between $1,650 and $1,700 since the start of 2023. On Friday, it was trading at $1,649. The overall crypto market capitalization has also remained above $1 trillion a year. On Friday, it was $1.09 trillion.
Another takeaway from the market this week was the disconnect between the US markets and the crypto market.
“What’s interesting to note is the short-term ‘disconnect’ between Bitcoin and the S&P 500, as the much-hyped narrative from last year of Bitcoin trading in sync with high-growth tech stocks appears to be losing steam. The Correlation Between Bitcoin and the S&P 500 had shot up above 0.8 but is now down to around 0.3, suggesting that Bitcoin behaves as a unique asset class and can be considered for portfolio diversification,” said Parth Chaturvedi, Head of Crypto Ecosystem at crypto exchange CoinSwitch.
“Crypto markets have decoupled from US indices, which is beneficial for the ecosystem,” echoed crypto platform Kunji’s founder, Anurag Dixit.
What can you expect next week?
According to Dixit, “Bitcoin is currently facing significant resistance from the $25,300 region in the near term.”
Saxena added, “Bitcoin’s support level is at $23,800, while resistance is at $24,200…As investors await further developments in the global economic and financial landscape, the broader cryptocurrency market appears to be following a similar trend.”
