Bitcoin (BTC) hovered above $28,000 on Thursday as major cryptocurrency assets shrugged off the US Federal Reserve’s 25 basis point rate hike and ongoing concerns over the banking sector and future monetary policy decisions.
BTC, the largest cryptocurrency by market cap, was recently trading around $28,200 as of Thursday afternoon, up over 4% over the past 24 hours. Just hours earlier, BTC had surged as high as $28,800 amid renewed confidence in riskier assets, at least temporarily. The trading pair BTC/USD on the Coinbase exchange surged to $28,839 at one point, according to data from TradingView.
“The recent crypto rally has been fueled by bank runs, which have caused many to become skeptical about traditional banking given all the vulnerabilities in deposit flights,” Edward Moya, a senior market analyst at forex market maker Oanda, wrote on Thursday. Moya believes BTC needs “a fresh catalyst” to break above $30,000 and see a prolonged rally.
Ether (ETH) jumped over 5% to recently trade at $1,818 on Thursday afternoon. The second largest cryptocurrency by market value rose as high as $1,858 earlier in the day – its highest level since August.
Litecoin (LTC) is up 12% for the day recently to $93. According to Coinglass data, traders have liquidated about $3 million in LTC short positions over the past 24 hours, which has pushed the price up to about $83 from a day ago. Layer 1 blockchain Aptos native APT token is up over 7% to around $13.
“Thursday’s market rally came after investors were already pricing in the possibility that the Fed will not hike interest rates again this year,” said Eric Chen, CEO and co-founder of Injective Labs, the company behind decentralized finance (DeFi ) protocol injective.
While Fed Chair Jerome Powell made no such assurances on Wednesday, the CME FedWatch tool showed that 66% of traders currently expect no rate hike at the next FOMC meeting, which will be held in May.
In an email, Chen also told CoinDesk that “the Fed’s concerns about inflation may also have fueled interest in cryptocurrencies as a potential inflation hedge.” He added that the market’s surge also coincided with news that Do Kwon, the founder of Terraform Labs, appears to have been arrested in Montenegro, which may have contributed to “short-term volatility.”
Meanwhile, stock markets also turned green, recouping some of their losses on Wednesday. The S&P 500 and the tech-heavy Nasdaq recently closed down 0.3% and 1%, respectively. The Dow Jones Industrial Average (DJIA) rose 0.2%.
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