As crypto asset prices rose to reclaim all their losses from the previous day, investors pushed past concerns of a banking crisis and the Federal Open Market Committee (FOMC) monetary policy decision at the upcoming meeting. Bitcoin (BTC) crossed $28,000 while Ether (ETH), Litecoin (LTC) and Layer 1 blockchain Aptos’ native APT token rose by 5%, 12% and 7%, respectively.
Crypto Market Reacts to Fed Rate Hike, Deutsche Bank Bond Yields
The day began with a renewed confidence in riskier assets as the U.S. Federal Reserve raised the benchmark interest rate by 25 basis points, a long-expected move. However, cryptocurrency traders kept a close eye on banking giant Deutsche Bank’s bond yields, which spiked to its highest levels in four years on Thursday, and the upcoming FOMC meeting that may cause price fluctuations in the crypto market.
By midday Thursday, BTC had risen above $28,000, Ethereum (ETH) was changing hands around $1,858 and Litecoin (LTC) was at $93, successfully reclaiming all their losses from the previous day. Layer 1 blockchain Aptos native APT token also increased 7% to hover at around $13. The CoinDesk Market Index, an overall measure of the crypto market’s performance, also saw a 1% spike.
Crypto Rally: Bank Runs, Coinbase, EU Regulations
“The recent crypto rally has been fueled by bank runs that have led many to become skeptical with traditional banking, given all the vulnerabilities with deposit flights,” Edward Moya, senior market analyst at foreign exchange market maker Oanda, wrote Thursday. Moya believes that BTC needs “a fresh catalyst” to break above $30,000 and enjoy a more extended rally.
The current bullish sentiment in the crypto market coincides with a number of developments that have spurred further growth in the sector. Last week, major U.S. exchange giant Coinbase announced that it has demanded the Securities and Exchange Commission (SEC) to clarify whether existing securities laws apply to digital assets. The European Union has also finalized legislation that clarifies the region’s regulatory approach to the cryptocurrency sector.
Crypto Growth Vital Amid Banking Crisis Threats: FOMC Meeting Looms
In the U.S., Coinbase is a major option for those getting started with cryptocurrencies and according to Moya, the exchange’s success is “vital for longer-term crypto growth.”
The next major catalyst comes in the form of the FOMC meeting on Tuesday, which could make or break the current BTC strength. The CME’s FedWatch tool currently sets the probability of a 25 basis point (bps) increase at more than 94%, which would boost the target range to between 5% and 5.25%.
Whatever decision is made, investors will be watching closely as the outcome could reverberate across the banking sector, the equity markets and the crypto space alike. As the world awaits this meeting, it remains to be seen whether the current bullish sentiment can be sustained in the long run. After all, “no one knows how regulators are going to rule if all tokens are securities,” according to Edward Moya.
Cryptocurrency investors grappled with a new banking crisis threat and the looming Federal Open Market Committee (FOMC) meeting as Bitcoin (BTC) edged below $28,000 Monday.
Crypto Market Dips: Banking Crisis Response Impact
BTC, the largest cryptocurrency by market capitalization, was recently trading at around $27,800, down over 5% over the past 24 hours, according to CoinDesk data. While Ethereum (ETH) followed a similar pattern, dropping more than 4% to change hands at around $1,813 Monday afternoon, the CoinDesk Market Index, which measures the crypto market’s overall performance, declined around 2.7%.
The recent dip in asset prices was the continuation of a downwards spiral that started on Sunday, which began when regulators prepared to seize control of First Republic Bank, the fourth bank to fail in the past two months, joining Silvergate, Silicon Valley and Signature banks.
Edward Moya, senior market analyst for foreign exchange Oanda, suggested that the fast response to First Republic’s implosion showed that the banking sector was prepared to address these types of crises and Wall Street may have become confident that wider banking risk had been “removed from the table.”
“It is looking like the U.S. banking system has a playbook to deal with the next banking crisis when it emerges, which is somewhat dampening the case for cryptos,” he added.
FOMC Meeting: Crypto Strength at Stake?
The banking crisis coupled with growing regulation issues in the U.S. and the European Union, has made investors wary about whether the current bullish sentiment will be sustained in the long run.
And with the FOMC meeting set to begin on Tuesday, investors will closely watch the decision as it could have profound implications on the banking sector and on the crypto space as well. The CME’s FedWatch tool currently sets the probability of a 25 basis point (bps) increase at more than 94%, which would boost the target range to between 5% and 5.25%.
“After a breakout (BTC above ~$25,000), it’s important to pay attention to pullbacks to gauge the buy strength remaining,” said Blockware Solutions Analysts. “In this case, BTC flashed some pretty bullish signals, as buyers quickly stepped in at the 50-day [simple moving average].”
The analysts said BTC has strong resistance between $30,000 and $31,000 and added that “it’s not unreasonable to assume that the FOMC policy decision could make or break current BTC strength.”
Indeed, with so many macroeconomic uncertainties at play, only time will tell whether cryptocurrencies will be able to buoy in the face of this downwards spiral and how the FOMC meeting could “make or break” crypto strength going forward.
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