(Kitco News) – Crypto traders are thanking the Fed for maintaining the status quo as prices climbed higher after the central bank announced they were keeping interest rates steady while maintaining the expectation that there will be three cuts before the end of 2024.
Both stocks and cryptos saw subdued trading for much of the trading day on Wednesday ahead of the FOMC announcement as traders wanted to avoid any potential volatility that could come if the Fed surprised the markets in any way. After the outlook fell in line with expectations, investors reengaged, leading to gains across the board.
At the closing bell, the S&P, Dow, and Nasdaq all finished in the green, up 0.89%, 1.03%, and 1.25%, respectively.
Data provided by TradingView shows that Bitcoin (BTC) rebounded from a dip to $62,000 shortly before Fed Chair Jerome Powell spoke and has rallied back above $66,000, with bulls looking to continue to push the price action.
BTC/USD Chart by TradingView
At the time of writing, BTC trades at $66,805, an increase of 5.05% on the 24-hour chart.
“Bitcoin rallied leading into the FOMC meeting and after, pairing the earlier losses of the last week,” said Steven Lubka, Head of Private Clients at Swan Bitcoin, in a note to Kitco Crypto. “Bitcoin has been consolidating beneath its all-time highs for several weeks, and the recent drop was likely overdone.”
Bitcoin's recovery "was further aided by Powell's comments that they may be slowing down the pace of their balance sheet runoff marking a notable shift of tone for the Chairman,” he added.
“The Fed selling off its balance sheet can be seen as a form of liquidity contraction within some parts of the monetary system, and investors have been trained to see this as a positive sign for expansionary liquidity,” Lubka said. “Bitcoin benefits tremendously from increasing liquidity in the system.”
While news headlines have been focused on the ‘big correction’ for Bitcoin, legendary trader Peter Brandt says the long-term chart shows it's business as usual, but warned that those chasing “crap coins” with leverage should be careful if a deeper correction does manifest.
The talk among traders is the big correction in Bitcoin. $BTC
I look at the long term chart, and say, "What correction?" I don't see a correction.
Yet, for suckers betting on memes and #crapcoins with leverage, any correction will = rekt pic.twitter.com/0DdVz6yYoE— Peter Brandt (@PeterLBrandt) March 20, 2024
Brandt also predicted that this cycle will flush out many useless altcoins, ultimately leading to Bitcoin dominance rising to 65%.
“Bitcoin is poised on the corresponding chart to ‘kill it,’” Brandt said.
“In the end, there will be only one crypto standing – that is the legend $BTC,” he added. “Target on this run is 65%. All others are pretenders. In the end, 99% of memes, crapcoins even most other macro caps will = ZERO.”
And market analyst Rekt Capital provided the following chart showing that Bitcoin has historically paused and consolidated after breaching its previous all-time high, only to surge higher a short time later.
#BTC
Don't lose sight of the bigger picture$BTC #Crypto #Bitcoin pic.twitter.com/KLiSzw9kuo— Rekt Capital (@rektcapital) March 20, 2024
Altcoins rally after the interest rate is held steady
Altcoins followed Bitcoin’s lead higher post-FOMC, with the vast majority of tokens in the top 200 recording gains on the day.
Daily cryptocurrency market performance. Source: Coin360
EtherFi (ETHFI) led the field with a gain of 36.4%, followed by increases of 25.4% for FLOKI (FLOKI) and 21% for AIOZ Network (AIOZ). Ribbon Finance (RBN) was the biggest loser, falling 5.8%, while Aptos (APT) declined 5.4%, and Avalanche lost 3%.
The overall cryptocurrency market cap now stands at $2.5 trillion, and Bitcoin’s dominance rate is 52.2%.
