The cryptocurrency market continued its uptrend last week but the upcoming policy announcement by US Federal Reserve (Fed) is expected to keep the market volatile, experts told Business Standard.
“This week, the release of Personal Consumption Expenditures (PCE) price data and the upcoming Federal Funds rate hike on February 2 is expected to lead to increased market volatility,” said Anurag Dixit, founder of crypto asset management platform Kunji said.
“Additionally, several moderately significant data releases are also scheduled before the rate hike,” he said.
On January 21, the total crypto market capitalisation rose above $1 trillion for the first time since early November, according to CoinMarketCap. It has stayed above $1 trillion since then. As of 3:30 PM on Friday, the market cap was $1.04 trillion.
The price of Bitcoin, the largest cryptocurrency by market cap, has risen 9.5 per cent. On Friday, it was trading at $22,960. Ethereum, the second largest crypto coin, was up 1.75 per cent in the last seven days and was trading at $1,579.
“Bitcoin began the week at a five-month high above $23,000, driven by a resurgence of bullish sentiment and accumulation by large investors. However, prices dropped on Wednesday in anticipation of US GDP data. In the past 24 hours, many cryptocurrencies saw a correction as economic data was released,” said Alankar Saxena, CTO and co-founder of crypto investment platform Mudrex.
The US registered a growth rate of 2.9 per cent in the quarter ending December 2022, beating market expectations. The market rose briefly but has cooled down since then. In the last 24 hours, Bitcoin and Ethereum were 0.11 per cent and 1.7 per cent in the red respectively.
“Ethereum also briefly reached above $1,600 in the early hours of Thursday but has since decreased to around $1,500. Both Bitcoin and Ethereum were unable to maintain their upward momentum,” Saxena added.
The Fed will hold its meeting on January 31 and February 1 and will announce if there is a change in its inflation-targeting stance on February 2.