Bitcoin bounces back to $65,000 after Federal Reserve talks - Hindustan Times
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Bitcoin bounces back to $65,000 after Federal Reserve talks

Mar 21, 2024 11:55 AM IST

Cryptocurrency market sees gains following Fed's policy meeting.

Bitcoin’s value ascended on Wednesday, defying the initial downward trend as market participants paused to consider the implications of the Federal Reserve’s recent policy stance.

FILE PHOTO: Representations of cryptocurrency Bitcoin are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo(REUTERS)
FILE PHOTO: Representations of cryptocurrency Bitcoin are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo(REUTERS)

And this leading one of cryptocurrencies jumped to $65,773.23, according to the report by Coin Metrics, by 1.7%. This recovery happened later when the price had already rejected the support level of $60,793.60 around midday.

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In fact, the crypto market, in general, has been upbeat, posting gains on the back of the Fed’s two-day policy meeting. Core bank ensured the interest rates were the same as the ones predicted in the open market, though, couched the possibility of a markdown later in the year. Cryptocurrency Bitcoin, like technology stock, usually benefits in a low-interest environment and have sufficient market liquidity, which can, in this case, escalate the positive market sentiments and investments in growth-based assets.

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‘Bitcoin is a bit of everything’

Owen Lau, Executive Director at Oppenheimer, highlighted, “There has been an inverse relationship between rates and bitcoin price. When the Fed increased interest rates in 2022, it took out liquidity from the market, which impacted bitcoin and tech stocks. When the Fed cuts rates, it provides liquidity to the market, which should benefit risky assets such as bitcoin. Bitcoin is a bit of everything — sometimes it trades like a high beta tech stock.”

In spite of the fact that bitcoin price has dropped by 10% this week since it hit a record high of $73,797.68 on Thursday, it still has made a 53% gain against last year’s price till the end of this month.

Other crypto's are also surging

Some other cryptocurrencies also showed growth amid the markets overcoming previous episodes of turmoil; as Ether rose by 1.2% per cent to $3,379.43 on Wednesday to more than $4,000 just a week ago. At the edge was Matic ($1.5%), Solana [$] was constant, while Dogecoin [$] added to what was already a good day by 7%.

It turned out that today stocks that are connected to cryptocurrencies performed at a satisfactory level. Coinbase’s stock soared by around 11% and MicroStrategy’s stock tracked closely, increasing by 9%, after the big drop of close to 20% witnessed a few days earlier.

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Based on the mining sub-sector, Iris Energy showed significant increases at 26% and CleanSpark at 22%, respectively. from my office! 20 seconds ago, Riot Platforms’ shares shot up by 11%, and Marathon Digital’s shares jumped by 16% as JPMorgan lifted their rating to overweight from neutral, selling crypto holders on rising institutional demand.

Bitcoin's flash sell-off sparks market concerns

The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite completed the day at new maximums showing the undisputed growth motivated by the Federal Reserve (Fed) meeting.

The current downturn of Bitcoin was caused by investors to make the impressionists after a remarkable surge of 70% from the beginning of the year to the hightest last Wednesday. According to the Appraisement CryptoUp Data, on March 12, a sharp rise in net profit contraction occurred among short-term holders to cash out their BTC holdings. This flash sell-off prompted a chain reaction of long position liquidation in the margin trading platforms and other similar-leveraged Bitcoin investments, which was especially prevalent in the first half of the current week.

Vijay Ayyar, Vice President of International Markets and Growth at CoinDCX, commented on the market’s volatility, “We’ve seen 20%-30% pullbacks in previous bitcoin bull markets as a normal occurrence when things start heating up. And we definitely had many signs over the past week of things heating up quite a bit.”

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He further cautioned that a drop below the $60,000 mark could signal a more significant downturn, potentially testing the $50,000 to $52,000 range, which he considers a critical threshold for the current bull market’s continuity.

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