Proactive Investors - Bitcoin (BTC) traders reacted positively to the latest policy announcement from the US Federal Reserve.
Despite jacking rates up another 25 bps to 5.25%, comments from the Fed pointed to a loosening of its grip on the economy, boding well for riskier assets such as bitcoin.
"In the statement from March we had a sentence that said: 'the committee anticipates that some additional policy firming may be appropriate'. That sentence is not in the statement any more, we took that out," Federal Reserve chair Jerome Powell said.
A pretty clunky comment from Powell, but essentially he is suggesting that the tightening cycle is now over, and bitcoin bulls responded with glee, sending the world’s largest cryptocurrency to the moon.
Well not quite, but price action was generally positive, with BTC/USDT adding 1.2% to close Wednesday just above US$29,000, where selling resistance was largely placed.
Another 0.2% was sprinkled onto the pair in the mornings Asia trading session, pushing bitcoin closer to US$29,100.
Upside for bitcoin (BTC) – Source: currency.com
Dovish calls from the Fed typically result in a sag on the dollar value, given the lower yield international investors can get from parking their cash in US money markets.
Thus we saw the strongest dip in the US Dollar Index (DXY) in a month on Wednesday, supporting an upwards move on bitcoin.
Balanced to bullish
Open interest on bitcoin futures is essentially even between long and short positions, suggesting a balanced forward sentiment. Similarly, long and short liquidations on Wednesday were pretty even at around US$20mln.
The bulls will surely be gunning for a move above 30k, while bears will be contending with buying support at US$28,500 and 28k, per Binance’s order book.
Also buoyed by a depressed greenback, Ethereum (ETH) managed to add 1.9% on Wednesday, pushing the ETH/USDT pair just above the critical US$1,900 price point.
Today has been a bit muted for the pair, having dipped just below the US$1.9k mark again.
There were no particular outliers among the blue-chip altcoins.
Bolstered by bitcoin and ether’s performance, Ripple (XRP), Cardano (ADA), Polygon (MATIC), Solana (SOL), Dogecoin (DOGE) and most of the other top-20 set added low single digits to their respective market capitalisaitons.
Global cryptocurrency market capitalisation added 1.3% overnight to hit US$1.3tn, while total value locked in the decentralised finance (DeFi) space added 1.7% to hit above US$49bn.
Overall, sentiment appears balanced to bullish in the crypto markets, as evidenced by the Crypto Fear & Greed Index going firmly in the green.
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