Bitcoin hovered near the highest since August as investors took Federal Reserve Chair Jerome Powell’s comments about progress on inflation as a sign that a less harsh monetary-policy backdrop lies ahead.
(Bloomberg) — Bitcoin hovered near the highest since August as investors took Federal Reserve Chair Jerome Powell’s comments about progress on inflation as a sign that a less harsh monetary-policy backdrop lies ahead.
The largest token rose as much as 2.4% before paring some of the gain to trade at $23,880 as of 5:20 a.m. Thursday in London. Smaller tokens also advanced, including a 2.5% climb in Ether. A gauge of the top 100 coins is up 37% in 2023.
A range of investments from stocks to bonds and crypto pushed higher after Powell said the disinflationary process is underway. He didn’t push back aggressively on a rally in global markets this year that’s loosened financial conditions, which can make it harder to temper price pressures.
Powell was speaking after the Fed downshifted as predicted to a quarter-point interest-rate hike. He said policy makers expect to deliver a “couple” more rate rises before putting their aggressive tightening campaign on hold.
“Cryptocurrencies are rallying on risk-on sentiment after dovish comments from the Fed overnight,” said Cici Lu, founder of Venn Link Partners, a blockchain adviser. She added that she’s detected more purchases by institutional clients in recent weeks.
Digital assets are rebounding from steep losses last year, a period pockmarked by blowups like that of the FTX exchange.
“Usage, adoption and innovation remain a much more positive picture than pricing and investor sentiment was reflecting,” said Richard Galvin, co-founder of fund manager Digital Asset Capital Management.
Galvin said he’s unconvinced crypto will stay highly correlated with the macro landscape, arguing sector-specific drivers will exert more influence.
For others, digital assets are vulnerable to any signs that borrowing costs must go higher for longer should inflation prove sticky.
Chart analysts have highlighted levels around $25,000 as zones where Bitcoin’s rally could fizzle. An example is Mark Newton, head of technical strategy at Fundstrat, who has flagged $25,200 as an area of potential resistance.
For now, virtual assets have a wind in their sails courtesy of dovish interpretations of Fed messaging. Smaller tokens such as Avalanche, Aave, Polygon and Binance Coin were among the best performers on Thursday.
For crypto market prices: CRYP; for top crypto news: TOP CRYPTO.
–With assistance from Sunil Jagtiani, Akshay Chinchalkar and Joanna Ossinger.
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