Cryptos Rise As Fed Fears Pause

By RTTNews Staff Writer | Published: 1/26/2022 9:25 AM ET

Cryptocurrencies continued their rally for the second day as global markets braced for the Federal Open Market Committee’s monetary policy review pronouncements on Wednesday noon.

Keenly watched would be the latest guidance regarding interest rate lift off, end of monetary stimulus tapering, the shrinking of the Fed’s $9 trillion balance sheet as well as where the Fed sees the inflation trajectory over the course of the next few months.

Though Wall Street had dropped further on Tuesday, Asian and European stock markets trended higher in Wednesday’s trade. American stock futures are portending gains on opening amidst a strong perception that Fed would not be more hawkish to start interest rate liftoff earlier than March.

Gold, that is often quoted as crypto’s fiercest competitor for the inflation-hedge status is in overnight negative territory. Dollar, crude oil and bonds are however trading with a positive bias.

Russia’s finance ministry officials have reportedly objected to the central bank’s proposal to ban cryptos altogether, which is also perhaps fueling the rally in crypto space.

Aggregate market capitalization rebounded to $1.73 trillion, versus $1.64 trillion on Tuesday and $1.5 trillion on Monday.

Bitcoin has gained close to 5 percent overnight and is currently trading at $38,200.68. Approximately 62 percent of BTC holders are in-the-money at current prices versus 46 percent on Monday.

Ethereum’s overnight rally of more than 8 percent has helped it trade at $2,625.77.

Among the top-20 cryptocurrencies, Polygon (MATIC) and Crypto.com coin (CRO) have gained more than 10 percent overnight.

Besides Ethereum (ETH), BNB (BNB), Cardano (ADA), Solana (SOL), XRP (XRP), Dogecoin (DOGE), Polkadot (DOT), Avalanche (AVAX) and SHIBA INU (SHIB) have gained between 5 and 10 percent overnight.

Overnight gains in Bitcoin (BTC), Terra (LUNA), and Wrapped Bitcoin (WBTC) are more modest at less than 5 percent.

Cosmos (ATOM) has however declined on an overnight basis.

Down the hierarchy, 55th ranked Maker (MKR) and 66th ranked Huobi Token (HT) are also in negative territory.

Meanwhile, the International Monetary Fund has urged El Salvador to narrow the scope of the Bitcoin law by removing the legal tender status, given the concerns around financial stability, integrity, consumer protection, and other risks.

The Kazakh government has blocked crypto mining in the country until February 1 amidst power outages that have been plaguing the country, triggering civil unrest.

Crypto’s correlation with stocks, particularly tech stocks, has often been the highlight of recent discussions on the two asset classes. Wednesday’s gains in crypto currencies also would need to be seen in such a perspective.

Despite the lingering concerns on how hawkish the Fed would be in its inflation combat and how that would impact the crypto asset class, crypto enthusiasts are definitely a relieved lot, given the impressive rebound that digital currencies have seen in the past two days.

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Article written by an RTT News Staff Writer, and posted on the RTT News.com website.

Article reposted on Markethive by Jeffrey Sloe