Bitcoin Nears $24K as Fed Rate Hike Looms; Ethereum Deploys Shadow Fork
By The world’s largest cryptocurrency, Bitcoin (BTC), has been trading close to 3% lower as of 9:02 a.m.[0] Presently, the cost of ET is approximately $[1] Last week, Bitcoin-related funds dominated digital-asset investment products inflows, accounting for almost all of the $117 million coming in.[0]
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.[2]
Last week, the BTC/USD rate attained a peak of $23,955 and has increased by over 40% since the start of[3] 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.[3]
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.[3] Consequently, any increase beyond this should be beneficial for the dollar and detrimental for Bitcoin.[3] If the hike is perceived to be a hawkish extension by investors, then a drop-down to around $20.7k can be expected.[4]
On Monday, Ethereum developers deployed the Shadow Fork in preparation for the Shanghai Hard Fork, scheduled for March 2023.[5] The shadow fork is anticipated to act as a testing platform for the Shanghai upgrade, enabling developers to spot any potential complications or glitches.[6] The Shanghai Upgrade is important as it will enable “stakers” to take out the ETH that has been staked.[6]
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.[2] Ultimately, it is all about the interest rate level and the reaction to the Fed’s decision.[3]
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
