Market Wrap: Bitcoin Little Affected by Fed Interest Rate Hike

Price Action

The U.S. Federal Reserve surprised almost no one with even a passing interest in monetary policy by raising rates by a hefty 75 basis points for the fourth consecutive time.

Bitcoin shrugged. Ether fell.

The largest cryptocurrency by market value was recently trading at roughly $20,200, down 1.3% over the past 24 hours after rising earlier in the day. As CoinDesk analyst Glenn Williams wrote earlier in the day, the crypto winter has given bullish investors the opportunity to accumulate at a favorable cost basis. Larger crypto investors are continuing to explore this opportunity.

"Whether asset managers are picking the right price point to go long will play out over the next 12 months, but they appear to be ahead of the curve," Williams wrote.

Ether, the second-largest crypto in market value, was recently changing hands at about $1,510, down more than 4% following the Fed’s decision to continue its months-long, monetary hawkishness.

The CoinDesk Market Index declined about 2%. Even dogecoin (DOGE), the biggest gainer among altcoins over the past week, plunged almost 10%. CRO was among the exceptions, recently rising more than 6.7%.

Meanwhile, major equity markets plunged following the Fed’s announcement, with the tech-heavy Nasdaq off 3.3% and the S&P 500 and Dow Jones Industrial Average (DJIA) off 2.5% and 1.5%, respectively. Investors remain concerned about the central bank’s strategy to combat rising prices, and the prospect of a harsh recession. Safe haven gold sank 0.7%.

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Technical Take

BTC Markets Entering a New Phase in Potential Accumulation Season

By Glenn Williams Jr

Bitcoin and ether’s significant decline in recent months is providing bullish investors the opportunity to accumulate at a favorable cost basis. Larger crypto investors are continuing to explore this opportunity.

Bitcoin has been trading in a narrow range for nearly five months, with support at about $19,000 a good portion of the time. Ether has dipped as low as $1,000 but has mostly hovered around $1,300 over the same period. Now, both have stepped up a rung, with support above $20,000, and $1,500, respectively.

The increases come amid a fourth consecutive 75 basis point interest rate hike by the Federal Open Market Committee (FOMC) in the Federal Reserve's fierce battle to stem inflation without throwing the U.S. economy into a steep recession. Crypto markets have largely responded to the central bank’s monetary gyrations and other macroeconomic events, usually rising with encouraging news and dipping when investors are more pessimistic. Such reactions are normal in asset markets of all stripes.

Read the full technical take by CoinDesk analyst Glenn Williams Jr.

Altcoin Roundup

• BitGo Joins Dogecoin Frenzy as Crypto Custody Firm Rolls Out a Wrapped Version: BitGo will be introducing wrapped dogecoin (wDOGE) to the Ethereum blockchain through a partnership with wDogeDAO, the crypto custody firm said Wednesday. The announcement comes after DOGE surged 102% in October. Read more here.
• Citi Says Ether May Be Moving Toward a Deflationary Future: The cryptocurrency's volatility dropped to historic lows following the success of the Ethereum Merge blockchain upgrade, the bank said. The Merge was the first of five upgrades planned for the blockchain and involved the shift from proof-of-work (PoW) to a more energy-efficient proof-of-stake (PoS) consensus mechanism. Read more here.

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