Bitcoin prices exceeded $23,000, the highest point in a month, after a smaller than expected rate hike from the Federal Reserve, causing crypto investors to cheer.
The world’s biggest cryptocurrency rose to its highest price in over a month yesterday, hitting $23,800 and staying there for over 24 hours. It’s currently trading at $23,330.80, as measured by Coin Metrics.
Traders were comforted by the prospect of softer policy action by the Fed at its next rate-setting meeting.
The tightening of monetary policy by the U.S. Stocks and cryptocurrencies have received significant weight from the central bank.
Since the start of 2021, Bitcoin is still down about 50%.
“This isn’t necessarily the end of the crypto bear market, but a relief rally for Bitcoin is long overdue,” Antoni Trenchev( CEO of cryptocurrency lender Nexo )said .
“Bitcoin is beginning to find its feet after a shaky month, and the next week will be telling,” said Trenchev.
At the upcoming meeting, the U.S. central bank is expected to hike rates by another 75 basis points rather than the previous 100.
Cryptocurrencies have been touted as a source of value that is uncorrelated with traditional financial markets. However, that thesis failed to materialize once the Fed began to hike interest rates and traders left the market.
After rallying beyond $22,700, bitcoin has now recovered its 200-week moving average, which appears to indicate a “trend reversal,” explain by Yuya Hasegawa, a crypto analyst at Japanese crypto exchange Bitbank.
“The market needs a little more assurance for deceleration in the pace of rate hike by the Fed,” he added. “Nevertheless, a short-term outlook for bitcoin is bullish and it could go as high as around $29k this week.”
Traders are betting that the worst of an intense market contagion caused by liquidity problems at some large crypto firms has likely subsided.
Recently, because of the failing of certain digital currency-related projects, digital currencies have fallen under intense selling pressure. Terra, an algorithmic stablecoin, plunged to nearly zero in May, resulting in the bankruptcy of crypto companies Celsius, Three Arrows Capital, and Voyager.
Elsewhere in the crypto sphere, Ethereum’s value increased more than 1% to $1,543.76, while other altcoins were also more expensive.
In the past seven days, the second-largest token has jumped more than 40% thanks to enthusiasm for an upgrade to its network known as the Merge.
This update, which will move ethereum away from environmentally dubious crypto mining to a more energy-efficient system, is now expected to be completed by Sept. 19.
“Crypto mining has been highly criticised for contributing to climate change due to its energy intensive nature and as wildfires rage across Europe and the United States, the promise that Ether transactions could be less damaging to the environment has caused a wave of interest,” Susannah Streeter said, an analyst in investment and markets