Bitcoin
and other cryptocurrencies rose Tuesday as digital asset traders continued to pile into overwhelmingly bullish bets on cryptos ahead of the interest rates decision from the Federal Reserve on Wednesday. It might mark a premature wave of wagers in a quiet market.
The price of Bitcoin has advanced 1% over the past 24 hours to near $27,100, paring gains after spiking above $27,400 to hit the highest levels this month. The largest digital asset’s recent rally marks another attempt to push past the $26,000 zone, around which Bitcoin has stagnated for more than a month amid historically low volatility and trading volumes as investor interest has waned.
“Bitcoin is testing initial resistance at the 50-day moving average around $27,200 as part of a short-term oversold bounce that preserved major support around $25,200,” said Katie Stockton, managing partner at technical research firm Fairlead Strategies.
Like the
Dow Jones Industrial Average
and
S&P 500,
cryptos are poised to move on the back of the Fed’s next interest-rate decision due Wednesday.
The central bank is expected to hold borrowing costs steady, but investors will scrutinize signals from the Fed amid shifting expectations over whether another rate hike is coming in November, or if rates will be held at their current level. Higher rates have weighed heavily on Bitcoin and stocks since last year with investors less likely to buy risky assets when returns are high on risk-free cash or government debt.
Ahead of the Fed decision, traders have turned decidedly bullish with bets on Bitcoin perpetual futures, which is the most liquid market in all of crypto. Open interest—the amount of capital tied up in active derivatives contracts—on Binance, the largest crypto exchange, has risen 3% over the past 24 hours to above $3.2 billion after a 14% increase on Monday, with wagers skewing bullish, according to data from Coinglass.
“Some crypto market participants may be getting ahead of themselves before the Fed meeting later this week, where they are expected to hold off hiking rates,” said Yuya Hasegawa, an analyst at crypto exchange Bitbank. “Bitcoin’s rally is likely coming to a halt as there will not be any releases of important economic data until the conclusion of this month’s Fed meeting.”
Beyond Bitcoin,
Ether
—the second-largest crypto—rose less than 1% to $1,650. Smaller tokens or altcoins were more buoyant, with
Cardano
climbing 2% and
Polygon
popping 3%. Memecoins were more muted, with
Dogecoin
and
Shiba
Inu advancing 1% each.
Write to Jack Denton at [email protected]
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