Bitcoin Steady Above $23k; Fed Meet Eyed
By Laxmikant Khanvilkar
Bitcoin held above $23,000 on Saturday as traders awaited next week’s Federal Open Market Committee decision on interest rates and any hints policymakers may drop about when their hiking campaign might end.
The largest cryptocurrency by market capitalization recently changed hands at around $23,120, up 1.8% for the day.
Ether, the second largest cryptocurrency by market capitalization, was trading around $1600, up by 2.0% in the similar time span.
The global crypto market capitalization is currently at $1.06 tn, representing a 1.91% increase over the last 24 hours. Meanwhile, the total volume has decreased by 8.10%, amounting to $50.53 bn. Of this, DeFi makes up 11.33%, or $5.73 bn, while stable coins account for 90.36%, or $45.66 bn. Bitcoin’s dominance has decreased by 0.20%, currently at 42.15%.
Traditional markets were also slightly up, with the S&P 500 Index up about 0.3%.
The crypto rally came after the latest Personal Consumption Expenditures (PCE) report showed a slowdown in inflation at the end of last year – a goal the Fed has been aiming for with rate hikes.
The CME FedWatch tool currently shows that traders see roughly a 99% chance the FOMC will raise rates by 25 basis points (0.25 percentage point) at its February meeting.
Meanwhile, the demand for increasing regulatory oversight of cryptocurrencies is on the rise. Four senior Joe Biden administration officials published a statement on Friday urging Congress to “step up its efforts” with respect to regulating the cryptocurrency market.
Markets next week will be eyeing the Federal Open Market Committee (FOMC) interest rate decision, largely expected to be a 25 basis point (bps) increase
BTC’s correlation with the S&P 500 has waned slightly over the last week, declining to 0.69 from 0.89 on Jan 11. Its correlation with the tech-heavy Nasdaq Composite remains elevated at 0.89, underscoring the “bitcoin trades like a high-beta tech stock” narrative.
Meanwhile, analysts have advised bullish investors to be wary about the stablecoin supply ratio (SSR) that measures the ratio between the supplies of bitcoin and stablecoins. As stablecoins represent buying power, a reduction in the SSR implies that investors are sending stablecoins to exchanges, likely for the purpose of buying bitcoin.
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