Fed day led to weakness in the cryptocurrency market as prices declined in the afternoon after Federal Reserve Chair Jerome Powell announced that the central bank will hold rates steady in a range of 5.25%-5.50%, the highest since 2001.
"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%," the Fed said in its monetary policy statement.
This hawkish tone also led to losses in the stock market as it compelled investors to reevaluate their expectations that a rate cut could happen as early as March. Inflation remains stubbornly high, while multiple headwinds, including Houthi rebel attacks on cargo ships in the Red Sea, threaten to push the cost of goods higher.
Less than stellar earnings by big tech also weighed on stocks, leading to a negative close for the S&P, Dow, and Nasdaq, which finished down 1.61%, 0.82%, and 2.23%, respectively.
Data provided by TradingView shows that Bitcoin (BTC) oscillated in a range between $42,265 and $43,757 on Wednesday, climbing higher in the lead-up to the interest rate announcement, only to slide lower in the hours that followed as traders took Powell’s statements under advisement and adjusted their trading plan accordingly. At the time of writing, Bitcoin trades at $42,420, a decline of 2.6% on the 24-hour chart.
BTC/USD Chart by TradingView
“At the moment the price is stuck between $42,500 support and $43,900 resistance,” said market analyst Crypto Rush. “The resistance is quite strong. Breakout of one will immediately send us to the $44,700.”
BTC/USDT 6-hour chart. Source: Telegram
“In fact, we are located inside the big horizontal channel ($37,000 - $45,000),” he added. “The main support is $41,650, as long as the price stays above it, bulls run this party.”
Market analyst Crypto Chiefs advised caution for the next couple of days as the “monthly close is likely to bring volatility,” and Bitcoin needs to hold above $42,300 for it to be a green month.
And MN Trading Founder Michaël van de Poppe said he still sees sideways trading for the foreseeable future, with a possible run up to $48,000 as the Bitcoin halving approaches in April.
My theory on #Bitcoin remains the same.
I'm still expecting a range-bound trend between $38-48K as I've been mentioning for ~2 months.
Probably a correction in the short-term after which a slight pre-halving rally to $48K seems likely. pic.twitter.com/MH5fTJ5r6n— Michaël van de Poppe (@CryptoMichNL) January 31, 2024
Altcoins take a hit
It was an overall red day for altcoins as all but a dozen tokens in the top 200 recorded losses on Wednesday. Altcoins are known to be riskier assets to hold, and the hawkish comments from the Fed prompted a bout of de-risking, leading to widespread declines.
Daily cryptocurrency market performance. Source: Coin360
LCX (LCX) was the standout token of the day, climbing 18.7% to trade at $0.297, while Nervos Network (CKB) gained 10.65%, and Ronin (RON) increased by 3.2%. FTX Token (FTT) led the losers, declining by 16.4% after the exchange announced it would not be relaunching and would instead focus on making its creditors whole. Meme token dogwifhat (WIF) continued its slide with a loss of 14.6%, and Altlayer (ALT) fell by 13.7%.
The overall cryptocurrency market cap now stands at $1.55 trillion, and Bitcoin’s dominance rate is 54.4%.
