By
Godfrey Benjamin
April 20th, 2024
The crypto market bounces back just ahead of the FOMC meeting this week. It seems the last month’s 20% correction in the crypto market has already priced in the Fed’s upcoming interest rate hike.
After a volatile last week, there’s some gree wave across the crypto market today. The world’s largest cryptocurrency Bitcoin (BTC) has registered a healthy bounce back and is currently trading 2.32% up at a price of $38,908 with a market cap of $740 billion.
The broader crypto market is also up 1.55% adding $50 billion in the last 24-hours. Ethereum (ETH) continues to follow Bitcoin once again with 2.32% gains. As of press time, Ether (ETH) is trading at $2,839 with a market cap of $342 billion. In the top ten crypto list, Ripple’s XRP gains the most by 5%.
As per technical charts, the recent BTC price bounceback has been from the trendline of higher lows.
#Bitcoin – Great trendline bounce. The top and bottom channel has both been tested 3 times. If this holds a higher low will once again be confirmed. pic.twitter.com/xiTrfkreed
— IncomeSharks (@IncomeSharks) May 2, 2022
The last month of April 2022 was quite brutal for all crypto investors. The entire crypto market corrected roughly by 20% eroding more than $400 billion in investors’ wealth. In fact, the crypto market correction broadly followed the US equity market.
The tech-heavy Nasdaq Composite tanked by a staggering 13.26% last month, the largest fall since 2008 financial crisis. The Dow Jones tanked 5% while the S&P 500 tanked 8.8%.
The equity and crypto market showed major volatility as investors started moving away from the risk-ON assets. This was majorly due to soaring inflation and rising interest rates topped by underwhelming earnings from the top-tier tech companies.
Preparing for the Fed Onslaught
Earlier, Fed Chariman Jerome Powell has already hinted for interest rate hike by half-a-percentage point. In an email to Forbes, Joe Haggenmiller, head of markets at leading crypto finance company XBTO Group, said:
“Macro uncertainty has driven all risk-on assets downwards over the last few months, including bitcoin. Price volatility in the bitcoin market over the last few weeks can be attributed largely to its correlation to other risk assets, which in general have been moving in reaction to conflict in Ukraine, supply chain issues due to rising Covid cases in China, and ongoing interest rate hikes and future balance sheet machinations by the Federal Reserve.”
However, the economic data shows that the US economy has shrunk by 0.4% in the first quarter of the year 2022. This has been its weakest quarter during the early days of the pandemic. Marcus Sotiriou, an analyst at the UK-based digital asset broker GlobalBlock wrote: “This is bullish for risk assets like bitcoin and equities in my opinion, as the Federal Reserve may become less hawkish to avoid a recession”.