Trader sees Bitcoin (BTC) at $30,000, Ethereum (ETH) at $2,400 after dovish Fed comments
The major coins surged after the US federal reservePolicy session ended on Wednesday. The global cryptocurrency market cap is up 8% at press time to $1.05 trillion.
| coin | 24 hours | 7 days | Price |
|---|---|---|---|
| Bitcoin BTC/USD | 7.9% | -2.2% | $22,860.56 |
| ether ETH/USD | 13.7% | 6.4% | $1,627.89 |
| Dogecoins DOGE/USD | 7.3% | -4.7% | $0.07 |
| cryptocurrency | 24-hour % change (+/-) | Price |
|---|---|---|
| Lido DAO (I DO) | +35.2% | $1.92 |
| Ethereum classic (ETC) | +31.5% | $32.99 |
| synthesis (SNX) | +24% | $3.66 |
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Why it matters: Bitcoin and Ethereum surged nearly 8% and 14% on the day after the Fed announced a 75 basis point rate hike.
At the close of Wednesday’s Federal Open Market Committee meeting, the Fed Chair said Jerome Powell took a dovish stance on future rate hikes, CNBC reported.
“As monetary policy tightens further, it likely becomes appropriate to slow the pace of hikes as we assess how our cumulative policy adjustments affect the economy and inflation,” CNBC said.
Powell addressed whether the U.S. economy was in recession, saying while growth was negative in the first quarter, it is expected to be slightly positive in the second quarter.
Edward MoyaA senior market analyst at OANDA noted that Powell didn’t rule out another 75 basis point rate hike at the next Fed meeting, but said it would be prudent to slow rate hikes at some point.
“A clear green light to buy risky assets will not come until we see signs that inflation is coming down. Inflation risks will remain elevated as energy shortages are likely, supply chain issues will not abate amid the weakening global outlook and pandemic-related issues remain a concern,” Moya said.
Speaking on cryptocurrencies, Moya said, “The FOMC decision created optimism that the end of the tightening is in sight, and that sparked a nice rally for risky assets that helped boost cryptos.”
“Given the outperformance of technology stocks, it should come as no surprise that crypto has stabilized. Crypto trading could continue to develop here as a peak in returns looks like it is there.”
Cryptocurrencies continue to track risky assets like stocks. On Wednesday, the S&P 500 and Nasdaq indexes shot up 2.6% and 4.1%, respectively, following the rate hike announcement.
Nick HeilHead of Management Advisory at a UK based digital asset trading company GlobalBlocksaid bitcoin tracking of risky assets like tech stocks shouldn’t necessarily be the case, adding that it’s difficult to predict when the correlation would end.
Heale said: “It will be a difficult decision to predict the timing of this reversal [decline in BTC prices] can happen, maybe late 2022 to early 2023 or earlier? The complex mix of economic factors will make market timing of a reversal, or even decoupling, from broader risk asset performance a difficult decision for investors!”
Michael van de Poppe posted the three ideal ingredients for a “summer relief rally” on Twitter.
The cryptocurrency trader sees Ethereum at $2,400 and Bitcoin between $28,000 and $30,000.
The ideal ingredients for a summer aid rally are here:
� Powell is becoming more dovish about politics and more dependent on data.
� The $ETH merger is due in September.
� Strong impact on 3AC, Celsius and more already priced in.
I see $ETH at $2,400 and $BTC at $28,000-30,000.
— Michaël van de Poppe (@CryptoMichNL) July 27, 2022
Meanwhile, on-chain data from Glassnode shows that bitcoin has exceeded the realized price — an indication of the value of all bitcoins at the price they were purchased at divided by the number of BTC in circulation.
#Bitcoin has just bounced back above the realized price currently trading at $21,800.
This represents the average price of the $BTC coin supply assessed at the time it last moved on the chain.
Live Chart: https://t.co/US6j4k5h4C pic.twitter.com/0LbXAdtNTz
— glassnode (@glassnode) July 27, 2022
Continue reading: The Big Short star Michael Burry says the SEC doesn’t have “the resources or IQ points to “properly” investigate Coinbase”.
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