SOL and AVAX lead crypto market recovery, BTC surpasses 50-day moving average ahead of FOMC

The total crypto market cap has risen from $1.61 trillion to $1.74 trillion in a week, with alternative cryptocurrencies (altcoins) such as (SOL), (AVAX) and (ICP) leading the recovery.

Solana's SOL rose 27% to $103, nearly erasing losses following the Jan. 11 debut of spot-based Bitcoin exchange-traded funds (ETFs) in the U.S., according to Velo Data, according to trading aggregator Jupiter , whose trading volume topped $500 million on Monday, surpassing activity on the industry-leading decentralized exchange Uniswap.

AVAX, the native token of Ethereum competitor Avalanche, is up over 25% in a week, while tokens like ICP, NEAR, DOT and XMR have gained between 13% and 22%.

Bitcoin (BTC), the largest cryptocurrency by market value, has gained nearly 10% and is above the widely followed 50-day simple moving average of $42,870. Crossings above and below this level are intended to signal the strengthening of bullish or bearish momentum.

Ethereum's native token, Ether (ETH), the second largest coin, is up just 0.6%. The underperformance is likely due to market makers trading against the direction of price movement, thereby curbing upward price volatility.

“Altcoins’ continued positive performance over the past six days inspires optimism and sets Bitcoin up for a test of $46,000,” said Alex Kuptsikevich, a senior market analyst at FxPro, in an email. “The outperformance of major altcoins suggests an expansion of participant interest beyond the two largest coins.”

Kuptsikevich said Bitcoin's move above the 50-day moving average is important but is not yet solid evidence of an uptrend, and altcoins' outperformance may be short-lived.

“Don’t expect continued demand for smaller altcoins or meme coins this year – that usually happens after a prolonged bull market,” Kuptsikevich noted.

The US Federal Reserve will announce its interest rate decision on Wednesday at 19:00 UTC. Half an hour later, Chairman Jerome Powell will speak at a press conference and explain the decision and the policy course.

The central bank is likely to keep key borrowing rates between 5.25% and 5.5% as markets now expect the first rate cut in May instead of March as before.

The focus will be on how quickly policymakers want to end the 11-year series of interest rate hikes, or so-called monetary tightening, that began in March 2022 and peaked in June 2022.

“The market is sensitive to the Fed's tone, with a dovish stance [policy easing] This shift could increase risk appetite and direct more capital into Bitcoin and related ETFs,” Tagus Capital said in its daily newsletter on Tuesday.

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