Bitcoin broke the $24,000 threshold for the first time in more than a month, as hopes of a rate hike less aggressive than feared from the Federal Reserve triggered a relief rally in cryptocurrencies.
The world’s biggest cryptocurrency surged as high as $24,047 Wednesday, up more than 8% in 24 hours and trading at levels not seen since mid-June, according to Coin Metrics data.
Traders took comfort from the prospect of softer policy action from the Fed at its next rate-setting meeting.
The effects of tighter monetary policy from the U.S. central bank have weighed heavily on risky assets like stocks and crypto.
Bitcoin is still down roughly 50% since the start of 2021.
“This isn’t necessarily the end of the crypto bear market, but a relief rally for Bitcoin is long overdue,” said Antoni Trenchev, CEO of crypto lender Nexo.
“Bitcoin is beginning to find its feet after a shaky month, and the next week will be telling,” he added.
The U.S. central bank is expected to hike rates again at its next policy meeting, but economists are forecasting a less aggressive increase this time of 75 basis points rather than 100.
Cryptocurrencies were touted as a source of value uncorrelated with traditional financial markets. But as institutional capital poured into digital assets, that thesis failed to materialize once the Fed began hiking interest rates and traders fled equities.
A rally beyond $22,700 means the cryptocurrency has now recovered its 200-week moving average, laying the technical groundwork for a “trend reversal,” according to Yuya Hasegawa, crypto market analyst at Japanese crypto exchange Bitbank.
“The market needs a little more assurance for deceleration in the pace of rate hike by the Fed,” he said. “Nevertheless, a short-term outlook for bitcoin is bullish and it could go as high as around $29k this week.”