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Bitcoin price hovers around $37,000, Ethereum rises

A digital representation of Bitcoin
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The price of Bitcoin hit $36,912 in trading on Friday afternoon, nearly flat since the morning but up 1.8 percent over the last 24 hours, according to CoinMarketCap. After an overnight surge took the world’s largest cryptocurrency above $37,400, it’s since ranged right around $37,000. Other major cryptocurrencies were flat or mixed as the S&P 500 stock index could be headed for its worst month since March 2020.

Cryptocurrency markets have been trying to find their footing following the Fed’s announcement on Wednesday that it was lifting interest rates in the near future. The news confirmed what the market has been suspecting since early November, when the central bank began reducing stimulus, first with fewer bond purchases. This comes as the Biden administration is reportedly preparing to file an executive order as soon as February that will outline how the federal government plans to set policies and regulate digital assets such as crypto.

Ethereum was up 1.4 percent over the last 24 hours, trading at $2,450 on Friday afternoon. It was only in November that the second-largest cryptocurrency hit an all-time high of almost $4,900, but it’s now down around 50 percent. This year has already seen the digital currency fall 34 percent.

Terra fell a whopping 14.5 percent by Friday afternoon, though most of the decline occurred overnight. It’s fallen about 31 percent over the last seven days, and has plummeted 53 percent below its 52-week high of $103.33 set in December.

Other top cryptocurrencies were largely lower as of Friday afternoon, but the losses were mostly muted for the often-volatile cryptocurrency sector.

  • Binance Coin – up 4.2 percent
  • Avalanche – up 0.6 percent
  • Solana – up 0.4 percent
  • Shiba Inu – down 0.7 percent
  • XRP – down 0.7 percent
  • Cardano – down 0.3 percent
  • Dogecoin – down 0.7 percent

Fed signals rate increases on the way, bond buying to end

At its January meeting, the Fed announced that it was continuing to taper its purchases of bonds and expects to stop buying bonds by early March. The central bank also indicated that it was poised to increase rates soon, signaling what many experts expect will be a rate hike as early as March.

“With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” 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 now pricing in a 100 percent probability that rates will rise in March. The only outstanding question is by how much. The market is expecting a 92 percent probability of a boost of 25 basis points, with the remainder projecting a larger 50-point hike.

“While we’re on the cusp of the Fed beginning to raise interest rates, the more significant step of starting to run off the balance sheet is still to come and the Fed provided no additional details in their post-meeting statement,” says Greg McBride, Bankrate’s chief financial analyst. “The combination of rate hikes and eventually shrinking their asset portfolio will complete the transition from going full throttle to putting the brakes on the economy.”

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. The resulting decline in stimulus has roiled financial markets in 2022.

Bitcoin still well below 52-week high

Bitcoin’s price has been under serious pressure since the Federal Reserve’s early November meeting. 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 more than 20 percent since the start of the year.

Nevertheless, Bitcoin remains atop the list of most valuable cryptocurrencies by total market capitalization.

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Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

Written by
James Royal
Senior investing and wealth management reporter
Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more.
Edited by
Senior wealth editor