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Bitcoin (BTC-USD), ethereum (ETH-USD) and a large basket of cryptocurrencies are catching a bid in Wednesday afternoon trading ahead of the Federal Reserve’s much-awaited interest rate decision.
Looking at intraday price action, bitcoin (BTC-USD +2.7%) is rising to $39.1K and ether (ETH-USD +1.7%) is drifting up to $2.85K. Both cryptos still remain rangebound since the start of 2022 and trade well below record highs in Nov. 2021. Meanwhile, U.S. stocks are trading mixed with the Dow Jones (DJI) +0.3%, S&P 500 (SP500) +0.1% and tech-heavy Nasdaq (COMP.IND) -0.3%.
“Everything in crypto, I think, is more muted right now,” Antonio Juliano, founder and chief executive of dYdX, a decentralized trading platform, told Bloomberg. Cryptos’ underwhelming performance since the start of this year comes as the Fed pivots to tighter monetary policy. At Wednesday’s meeting, the Federal Open Market Committee, the Fed’s policymaking arm, is expected to hike the interbank lending rate by 50 basis points for the first time since 2000, which would be an aggressive move since the Fed Funds Rate was hanging at the zero lower bound less than a year ago.
Amid Fed tightening fears, outflows from the decentralized world have recently taken hold as investors pulled out ~$120M from crypto products last week, bringing outflows over the past four weeks to $339M, Bloomberg reported, citing data from CoinShares. Of course that figure is a small fraction of the global crypto market cap, recently standing at $1.75T.
While cryptos have been one of the best performing asset classes intraday, crypto-focused stocks are mostly changing hands in the red. SOS (SOS -6.3%) Marathon Digital (MARA -1.4%), BIT Mining (BTCM -4.4%), Bit Digital (BTBT -3.5%) and Core Scientific (CORZ -7.1%) are among some of the biggest percentage decliners so far.
Earlier this week, (May 3) Uzbekistan set a new crypto policy framework.