Bitcoin Gains After the Release of Fed Minutes
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Fears over rate hikes and a rout in stocks has weighed on Bitcoin and other cryptos.
Dreamstime
Prices of
Bitcoin
and other cryptocurrencies ticked up Wednesday after the Federal Reserve meeting minutes showed slowing inflation could support rates peaking in 2023.
The price of Bitcoin was in the green, up roughly 0.5% in the past hour since the release of the document detailing discussions at the last Fed meeting. Bitcoin has declined over the last 24 hours, though, down 3.8% to $23,764.67, slipping from recent highs above $25,000 and returning to levels seen a week ago.
Wednesday’s gains are a result of investor optimism on a slowdown in rate hikes this year, as supported by the comments made by policymakers in the Jan. 31-Feb. 1 meeting. The minutes showed that most Fed officials supported slowing the pace of interest rate increases as they assessed the incoming economic and inflation data.
Lower interest rates increase demand for higher-risk wagers like volatile cryptocurrencies.
Bitcoin has gained tremendously so far, consolidating the largest digital asset above the key $20,000 mark, with the rally to start 2023 carrying it as much as 50% higher to above $25,000—the highest levels since last summer. The digital asset has even outperformed the Dow Jones Industrial Average and S&P 500 in recent days.
Some market participants are optimistic that the roaring rally in cryptos that kicked off this year—which some have called the start of a new bull market—has more staying power.
“The conditions are ripening not only for a recovery of Bitcoin and crypto but also a durable rally of sorts for some time,”said Vineeth Bhuvanagiri, the managing director of Emurgo, the commercial arm of the Cardano blockchain.
Nevertheless, more inflation indicators come later this week—in the form of the Fed’s preferred measure of inflation, the personal consumption expenditures (PCE), due Friday. A bad reading could kill the cryptocurrency rally.
Beyond Bitcoin,
Ether
—the second-largest crypto—has gained 0.43% to $1,619.31 over the past hour while smaller cryptos like Cardano are up 0.6% over the past hour. Both have lost ground over the past 24 hours.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com and Jack Denton at jack.denton@barrons.com.