Bitcoin price explodes to $38,000, Ethereum soars

The cryptocurrency continues to rally, with the price of Bitcoin hitting $38,191 on Wednesday morning, a gain of 4.7% in the past 24 hours, according to CoinMarketCap. The world’s largest digital currency has rebounded in the past few days after a huge drop over the weekend. Yet Bitcoin remains well below its 52-week high – an astonishing 44%. Other major cryptocurrencies including Ethereum and Solana also posted strong gains over the previous day.

The rise in the cryptocurrency comes as the market awaits the Federal Reserve’s interest rate decision this afternoon. The market has already priced in higher rates and many analysts expect multiple rate hikes this year to help fight inflation. This has hit cryptocurrency particularly hard in recent months, but equities have also been stung in recent weeks, with major indexes such as the S&P 500 falling into correction territory.

Ethereum was trading at $2,622 early Wednesday, up 8.2% from the previous 24 hours. The second-largest cryptocurrency is still down 46% from its 52-week high of nearly $4,900 and is down 29% so far this year.

Meanwhile, Solana climbed to $99.67 in early trading, up 9.1% from the previous day. It is a far cry from its recent high of $260 and has reportedly been facing a number of technical issues.

Other popular cryptocurrencies have risen sharply in the last 24 hours:

  • Avalanche – up 9.8%
  • Cardano – up 7.5%
  • Dogecoin – up 7.0%
  • Polkadot – up 7.0%
  • Binance Coin – up 6.0%
  • XRP – up 5.1%
  • Terra – up 2.1%

It’s been a broad rally so far on Wednesday, especially among the biggest cryptocurrencies.

Bitcoin still well below 52-week high

The price of bitcoin has been under severe pressure since the Federal Reserve meeting in early November, when the central bank announced that it would start reducing its bond purchases, reducing the stimulus to the financial system. The cryptocurrency hit close to $69,000 in November.

From there it was mostly downhill. The downward trend continued for much of December and into January. After peaking above $51,000 in late December, the digital currency fell to nearly $33,000 in late January. Bitcoin bounced off six-month lows set earlier in the week, but remains down almost 18% for the year.

Nevertheless, Bitcoin remains at the top of the list of the most valuable cryptocurrencies by total market capitalization.

Waiting for the Fed’s next move as inflation ripples through the economy

At its December meeting, the Fed announced it was increasing the pace of its cut, buying even fewer bonds than it had planned in November. The new pace means the Fed will stop buying bonds by March 2022.

From there, the Fed said it would eventually raise interest rates, if conditions warranted it.

“With inflation having been above 2% for some time, the committee expects it to be appropriate to maintain this target range until labor market conditions have reached levels consistent with the assessments of the maximum employment committee,” the Federal Open Market Committee said in a prepared statement. .

Now, market analysts expect the Fed to raise interest rates at its next meeting in March. According to CME’s FedWatch tool, the market is pricing in a 92% chance of the Fed raising rates by 25 basis points, with a 5% chance of a 50 basis point hike.

With inflation rising last year to its fastest pace in 40 years, the Fed is looking to rein in price increases, but not too hard. Although the Fed is not expected to raise rates at today’s meeting, analysts are waiting for the post-meeting statement to see how aggressive the Fed intends to be.

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Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are cautioned that past performance of investment products does not guarantee future price appreciation.

Richard L. Militello