The Bitcoin (CRYPTO: BTC) price made its biggest move in more than seven days while most Aussies were asleep.
Last night it edged out of that range, gaining 5.9%. The Bitcoin price has retraced a touch since then, currently at US$$39,681. That’s up 4.4% from this time yesterday, according to data from CoinMarketCap.
What lifted the Bitcoin price?
The world’s original cryptocurrency looks to have gotten a boost from the US Federal Reserve yesterday (overnight Aussie time).
The central bank increased the official interest rate by 0.50% and announced it will begin cutting its holdings of US treasuries next month. But Fed Chairman Jerome Powell wasn’t as hawkish as investors had feared.
With the market having broadly priced in the likelihood of an 0.75% rate hike, shares rallied on the announcement. Risk assets, like high-growth tech shares, led the way. The tech-heavy NASDAQ closed up 3.2%.
That same bullish sentiment boosted the Bitcoin price and swept through the crypto markets. In fact, every one of the top 100 tokens by market capitalisation (save the stablecoins) is well into the green over the past 24 hours.
According to Stephane Ouellette, CEO of FRNT Financial, Powell’s relatively more dovish stance “contributes to speculative appetite, which is likely to be bullish for crypto”. (Courtesy of Bloomberg.)
For the Bitcoin price to break out of this year’s trading range and charge higher, investors need some excitement to spur them on, says David Duong, head of institutional research at Coinbase.
According to Duong (quoted by Bloomberg), “We have seen the carry-over of many important crypto-specific themes from last year but very little in the way of new ‘top down’ narratives, which are crucial to the ‘hype cycles’ in this space.”
With the Bitcoin price closely aligned with the NASDAQ, Nexo co-founder Antoni Trenchev said it could drop to US$33,000 in the near term. Trenchev is forecasting that it would find strong support from buyers around US$30,000.
However, he added: “Sentiment towards Bitcoin can move on a dime. The narrative changes quickly. Nobody needs reminding what happens when Bitcoin starts to move and retail FOMO kicks in.”