Bitcoin and Ethereum rallied after a week of losses, mirroring gains made in global tech indices as the US Federal Reserve played down the likelyhood of hiking interest rates by 75 basis points at a time in coming months.
The largest coin by market cap climbed 3.62% to US$39,665, changing hands at it highest level in nearly a week, although still below its key support level of US$40,000.
Ethereum on the other hand gained 4.58% to US$2,935, also its highest level for six days but, like Bitcoin, still below its key support level.
Yesterday’s rally in the crypto market came after the US Federal Reserve raised interest rates by 50 basis points, but played down the likelihood of interest rates rising by 75 basis points at time in future moves, which investors had feared. The comments boosted the US market.
The rally in equities and crypto was as expected after the FOMC meeting, said Marcus Sotiriou, analyst at GlobalBlock.
"The market clearly priced in this bearish event during the weeks leading up to the FOMC meeting, where we saw significant sell pressure," he said.
Optimistic comments from Fed chief Jerome Powell have provided "clarity [that] will allow the crypto market to rally in the short-term", said Sotiriou.
Cryptos have increasingly mirrored global equity markets as investors migrated into cryptocurrencies during the pandemic.
In particular, digital tokens will follow the movements of the tech indices, which are the Nasdaq in the US and the Hang Seng in Hong Kong.
The Nasdaq was up 3.19%, or 401 points to 12,964 in yesterday’s trading, while the Hang Seng is currently trading 0.52%, or 105 points, at 20,974.
In some of the altcoins, Solana was up 8.59% to US$93.51, Terra was up 2.33% to US$86.07 and Cardano was up 11.06% to US$0.8661.
In addition, Federal Reserve Chairman Jerome Powell was optimistic in the press conference following the announcement of the rate hike – he thinks inflation may have peaked in March. Currently, the data is in confluence with this thesis, as inflation expectations are relatively flat – the University of Michigan Consumer Sentiment Survey and 5-year breakeven rate are both stable. However, we need to wait for more data in the coming months to confirm this.He also dismissed the idea of a 75 basis point rate hike in June which is what many were predicting, and clarified the Federal Reserve plan to hike rates by 50 basis points in the next 2 meetings. Elon Musk continues to make headlines as he changed his profile picture on Twitter to a montage of BAYC (Bored Ape Yacht Club) Apes, hence causing the BAYC floor price to increase by 10 ETH followed the BAYC land sale of Otherdeeds, where $320 million was sold in what was considered the largest NFT mint in history. It was so large that by the time the virtual land deeds sold out, buyers paid a total of about $123 million in gas fees as the volume of transactions caused gas fees to soar. This highlights the need for Ethereum to transition from Proof of Work to Proof of Stake where it should become a more efficient blockchain.