Bitcoin price jumps above $37,000, altcoins rally
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Following days in the doldrums, Bitcoin has zoomed back to $37,340 in Tuesday afternoon trading. It’s a rise of 3.8 percent over the prior 24 hours, according to CoinMarketCap. After recovering losses on a volatile Monday afternoon, the digital currency has continued to rise throughout Tuesday. Still, Bitcoin remains 46 percent below its 52-week high of nearly $69,000 in November. Much of the cryptocurrency world has rallied after the past few days of declines.
This volatility comes as the Federal Reserve meets today and Wednesday to discuss the economy and when to raise interest rates as inflation surges. With rates poised to climb higher in the next few months and maybe several times this year, cryptocurrency has been hit hard almost universally for the last few months.
Ethereum rallied 5.4 percent over the last 24 hours, to a price of $2,497. Despite the gain, the second-largest cryptocurrency is still down more than 49 percent from its 52-week high of nearly $4,900, which it achieved as recently as November. It’s declined by more than 32 percent in 2022.
Many other popular altcoins have rallied over the last 24 hours:
- Avalanche – up 13.5 percent
- Solana – up 11.0 percent
- Dogecoin – up 9.0 percent
- Binance Coin – up 6.0 percent
- XRP – up 3.8 percent
- Terra – up 1.8 percent
However, like Bitcoin, most of these cryptocurrencies have moved up somewhat cautiously on Tuesday.
Bitcoin hovering above six-month lows
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.
That 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. After the most recent decline, Bitcoin is trading above six-month lows set on Monday.
The Fed reduces stimulus 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 an 88 percent probability of the Fed boosting rates by 25 basis points, with a 5 percent probability of a 50 basis point bump.
While Bitcoin’s price peaked at $68,990.90 in early November, the cryptocurrency’s value has steadily weakened since then. Nevertheless, Bitcoin remains atop the list of most valuable cryptocurrencies by total market capitalization.
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