Cryptocurrency continues to rally, with the price of Bitcoin rising to $38,191 on Wednesday morning, a gain of 4.7 percent over the last 24 hours, according to CoinMarketCap. The world’s largest digital currency has bounced back over the last few days following a huge decline over the weekend. Still, Bitcoin remains well below its 52-week high – a stunning 44 percent. Other major cryptocurrencies, including Ethereum and Solana, have seen big gains over the prior day, too.
The rise in cryptocurrency comes as the market awaits the Federal Reserve’s interest rate decision this afternoon. The market has already been pricing in higher rates, and many analysts expect multiple rate hikes this year to help combat inflation. That’s hit cryptocurrency especially hard over the last few months, but stocks have also been stung in the last few weeks, with major indexes such as the S&P 500 tumbling into correction territory.
Ethereum was trading at $2,622 early Wednesday, up 8.2 percent over the prior 24 hours. The second-largest cryptocurrency is still down 46 percent from its 52-week high of almost $4,900 and has declined 29 percent so far this year.
Meanwhile, Solana climbed to $99.67 in early trading, up 9.1 percent over the prior day. It’s well off its recent high of $260, and has reportedly been facing a number of technical issues.
Other popular cryptocurrencies have risen strongly over the last 24 hours:
- Avalanche – up 9.8 percent
- Cardano – up 7.5 percent
- Dogecoin – up 7.0 percent
- Polkadot – up 7.0 percent
- Binance Coin – up 6.0 percent
- XRP – up 5.1 percent
- Terra – up 2.1 percent
It’s been a broad-based rally so far on Wednesday, especially among the largest cryptocurrencies.
Bitcoin still well below 52-week high
Bitcoin’s price has been under serious pressure since the Federal Reserve’s early November meeting, when the central bank announced that it would begin tapering its purchases of bonds, reducing stimulus in the financial system. The cryptocurrency topped out at nearly $69,000 in November.
From there, it’s been mostly downhill. The downtrend continued through much of December and into January. After peaking above $51,000 in late December, the digital currency fell to nearly $33,000 in late January. Bitcoin bounced off six-month lows set earlier in the week but remains down nearly 18 percent for the year.
Nevertheless, Bitcoin remains atop the list of most valuable cryptocurrencies by total market capitalization.
Awaiting the Fed’s next move as inflation ripples through economy
At its December meeting, the Fed announced that it was increasing the pace of its taper, purchasing even fewer bonds than it had projected in November. The new pace means the Fed will stop buying bonds by March 2022.
From there, the Fed has said that it will eventually raise interest rates, as conditions warrant.
“With inflation having exceeded 2 percent for some time, the committee expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment,” said the Federal Open Market Committee in a prepared statement.
Now market analysts are expecting the Fed to increase interest rates at its upcoming March meeting. According to CME’s FedWatch Tool, the market is pricing a 92 percent probability of the Fed boosting rates by 25 basis points, with a 5 percent probability of a 50 basis point bump.
With inflation rising last year at the highest pace in 40 years, the Fed is looking to dampen price increases but not hit the brakes too hard. Although the Fed is not expected to lift rates at today’s meeting, analysts are waiting on the post-meeting statement to see how aggressive the Fed intends to be.
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