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Bitcoin and the wider crypto market continued to trade correlated with risk assets Tuesday ahead of the Federal Reserve’s interest rate decision tomorrow.
The largest cryptocurrency by market cap was up ever so slightly by 0.2% at the time of writing, trading for $20,414, according to CoinGecko.
And Ethereum, the second biggest cryptocurrency by market cap, was priced at $1,579—a 0.6% day increase.
U.S. stocks, on the other hand, had a rocky day of trading: all Wall Street’s major indexes dropped on news that the labor market was strong—something that could lead to the Fed continuing to increase interest rates. This is because low unemployment typically means people spend more, leading prices to increase.
But Chinese stocks listed in the U.S. had a stellar day of trading after social media posts claimed that the country’s government may ease its strict COVID-19 lockdowns.
Central banks around the world have been raising interest rates to control soaring prices. The Fed has been particularly eager to get inflation under control because it’s at a four-decade high. Investors have therefore avoided so-called risk assets like equities and Bitcoin.
Bitcoin and crypto has typically been closely correlated with U.S. stocks—particularly tech stocks. More recently, however, Bitcoin has proven to be somewhat more resilient to larger macroeconomic trends, leading to questions about whether the asset has “decoupled” from equities.
The Federal Reserve tomorrow will announce its latest interest decision. It was expected it would slow down the particularly aggressive monetary policy it’s used this year to tame inflation—but today’s figures show that those expectations may be misplaced.
“With markets shifting expectations towards a dovish outcome at the upcoming meeting, we are concerned about a negative market reaction to persistent hawkishness from the Fed,” Singapore-based crypto investment firm QCP Capital’s Darius Sit told Decrypt.
While other cryptocurrencies haven’t moved too much today, Dogecoin has continued to stand out among the largest crypto assets by market cap.
Dogecoin Now Second-Largest Proof-of-Work Coin After Ethereum Merge
The original meme coin has surged 7.2% in 24 hours, trading for $0.13. It has also jumped 132.4% in the past seven days, making it the best performing digital asset over the course of a week.
This is mainly because Twitter’s new CEO Elon Musk has continued to post Dogecoin-related memes on the social media platform, leading to renewed interest in the coin—the eighth biggest digital asset by market cap.