Ether has hugely outperformed bitcoin since both cryptocurrencies formed a bottom in June 2022. Ether’s superior gains have come as investors anticipate a major upgrade to the ethereum blockchain called “the merge.”
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Cryptocurrencies rose slightly on Wednesday, building on recent gains as investors awaited the latest policy decision from the Federal Reserve.
Bitcoin rose 1.4% to $28,645.10, according to Coin Metrics. Ether was flat after a big move higher on Tuesday.
Investors were on the edge of their seats, counting down to the conclusion of the Fed meeting on Wednesday afternoon. The central bank is widely expected to raise interest rates another 25 basis points. That could lead bitcoin and ether prices to sell off “but not by much,” Bernstein analysts said early Wednesday.
“People are wondering if this is an economic crisis, or a just a crisis of financial conditions,” said Callie Cox, U.S. investment analyst at eToro. “Right now, it looks like the latter, and markets are finding some relief in that. Headlines have calmed down, and investors are willing to look on the bright side of a growth obstacle – lower inflation and a resurgence in risk appetite.”
Bitcoin (BTC) before the Fed
Bitcoin volatility has come back this month, sending the cryptocurrency’s price up more than 20% for the month and bringing its year-to-date gains to more than 70%. At the same time, its correlation with stocks has broken, after trading in lockstep with equities for about two years.
Nevertheless, macroeconomic factors are still the biggest drivers of bitcoin’s price, and investors will also be listening to Fed Chair Jerome Powell for long-term economic projections in addition to the decision on the interest rate hike.
Bitcoin is showing upside exhaustion and approaching a heavy resistance level at between $29,000 and $30,000 according to BTIG’s Jonathan Krinsky.
Follow our live coverage of the Fed rate decision today.