• Bitcoin held steady above $23,000 on Friday as traders awaited the Federal Open Market Committee decision on interest rates.
• The largest cryptocurrency by market capitalization recently changed hands at around $23,100, up 0.1% for the day.
• Bitcoin and ether have outperformed equities this year so far, with ETH up 32% and the CoinDesk Market Index up 39%.
The crypto rally came after the latest Personal Consumption Expenditures (PCE) report showed a slowdown in inflation at the end of last year – a goal the Fed has been aiming for with rate hikes. The CME FedWatch tool currently shows that traders see roughly a 99% chance the FOMC will raise rates by 25 basis points (0.25 percentage point) at its February meeting.
With the recent broader market rally, top crypto assets like bitcoin and ether (ETH) have topped equities this year: ETH is up about 32%, while the CoinDesk Market Index is up 39%. In comparison, the S&P 500 and Nasdaq Composite index were up 6% and 10%, respectively.
Edward Moya, senior market analyst at foreign exchange Oanda wrote in a Friday note about the Federal Reserve’s rate-setting unit that “Bitcoin should still consolidate leading up to the Federal Open Market Committee (FOMC) decision, with risks to downside if Fed sticks to its hawkish mantra.” Joel Kruger, markets strategist at crypto exchange LMAX Digital said from a technical standpoint that “the price action suggests investors may be getting comfortable”.
Bitcoin continues to hold steady above $23K as traders eye next week’s FOMC meeting and any hints policymakers may drop about their hiking campaign ending. Although analysts suggest there are risks to downside pre-meeting due to its hawkishness, it appears investors are becoming more comfortable investing in crypto assets like bitcoin and ether which have outperformed equity markets this year so far.