Bitcoin Nears $24K as Fed Rate Hike Looms; Ethereum Deploys Shadow Fork
The world’s largest cryptocurrency, Bitcoin (BTC), has been trading close to 3% lower as of 9:02 a.m. Presently, the cost of ET is approximately $ Last week, Bitcoin-related funds dominated digital-asset investment products inflows, accounting for almost all of the $117 million coming in.
The price of Bitcoin has declined less than 1% over the past 24 hours to $23,250, after coming within striking distance of $24,000 in a spike over the weekend. Bitcoin is currently trading at $22,604.59, down 1.4 percent on an overnight basis.
On Wednesday, February 1, 2023, at 2 pm EST, the U.S. Federal Reserve will announce its latest interest rate adjustment. The CME FedWatch Tool reports that practically all analysts are predicting a quarter-point increase of 25 basis points.
Last week, the BTC/USD rate attained a peak of $23,955 and has increased by over 40% since the start of Glassnode, a crypto analytics platform, recently reported that BTC's price has increased beyond three significant on-chain metrics due to its recent positive momentum.
In the base case scenario, the Federal Reserve will raise the interest rate by 25 basis points and indicate that further rate increases are necessary. Consequently, any increase beyond this should be beneficial for the dollar and detrimental for Bitcoin. If the hike is perceived to be a hawkish extension by investors, then a drop-down to around $20.7k can be expected.
On Monday, Ethereum developers deployed the Shadow Fork in preparation for the Shanghai Hard Fork, scheduled for March 2023. The shadow fork is anticipated to act as a testing platform for the Shanghai upgrade, enabling developers to spot any potential complications or glitches. The Shanghai Upgrade is important as it will enable “stakers” to take out the ETH that has been staked.
As the market awaits the Federal Reserve decision on interest rates due Wednesday, bitcoin educator Dan Held said: “Bitcoin feels poised for a breakout.”
This could be a very volatile week for the crypto and broader markets, as the correlation of Bitcoin and the broader crypto market with the S&P 500 and the US Dollar Index is very close. Ultimately, it is all about the interest rate level and the reaction to the Fed’s decision.
0. “Crypto Markets Today: Bitcoin Dips Below $23K Ahead of Fed's Meeting” Yahoo Finance, 30 Jan. 2023, https://finance.yahoo.com/news/crypto-markets-today-bitcoin-dips-222615293.html
1. “Bitcoin retreats from $24,000 as crypto investors await Fed rate meeting” Yahoo News Australia, 30 Jan. 2023, https://au.news.yahoo.com/bitcoin-price-latest-crypto-investors-fed-rate-meeting-ethereum-114604345.html
2. “Bitcoin And Crypto This Week: Here's What Will Be Important” Bitcoinist, 30 Jan. 2023, https://bitcoinist.com/bitcoin-crypto-this-week-what-will-be-important/
3. “The Federal Reserve meeting looms large as the Fed's hawkishness may send Bitcoin lower.” CoinJournal, 30 Jan. 2023, https://coinjournal.net/news/4-bearish-factors-for-bitcoin-this-week/
4. “FOMC: How Will Bitcoin React to a 25 BPS Hike?” Watcher Guru, 30 Jan. 2023, https://watcher.guru/news/fomc-how-will-bitcoin-react-to-a-25-bps-hike
5. “Cryptocurrencies Stay Bullish As Bitcoin Heads for $25000, Ahead of FED Meeting” FX Leaders, 30 Jan. 2023, https://www.fxleaders.com/news/2023/01/30/cryptocurrencies-stay-bullish-as-bitcoin-heads-for-25000-ahead-of-fed-meeting/
6. “Cryptos Falter But Market Cap Holds Above $1 Trillion” RTTNews, 25 Jan. 2023, https://www.rttnews.com/3339236/cryptos-falter-but-market-cap-holds-above-1-trillion.aspx
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