Powell and the Fed boost cryptocurrencies; Bitcoin recovers to $17,000
By Álvaro Estevez / Alejandra Zamora
Date: Thursday 01 Dec 2022
(Sharecast News) - Cryptocurrencies keep up their good trend. Bitcoin (BTC) has recorded gains of more than 1% in the last 24 hours and regained the $17,000 mark for the first time since November 11. Meanwhile, Ethereum (ETH) rises 0.5% and is trying to reach $1,300.
Bilal Little, president of DFD Partners, explained on 'CoinDesk TV' that this week's rally reflects a reordering of prices that often follows periods of pain in the market. "Whenever you have an episodic event, markets tend to oversell, and what also happens is you see the immediate effects of contagion, and everybody starts pointing fingers. Then, as the markets get more clarity, you see the fair market value come back into alignment," he added.
A substantial part of this upward movement can be attributed to Jerome Powell's latest statements. The Federal Reserve (Fed) chairman acknowledged that the time for the central bank to undertake more moderate rate hikes may be just around the corner. "It makes sense to moderate the pace at which we raise our interest rates as we approach the level of moderation that will be sufficient to reduce inflation. The time to moderate the pace of rate hikes may come as soon as the December meeting," Powell stressed.
Therefore, CME's FedWatch tool gives a 79.4% probability of a 50 basis point hike to the 425-450 basis point range at the December 14 conclave of the Federal Open Market Committee (FOMC).
Powell's stance is in line with what was seen in the minutes of the Fed's November meeting, which opened the door to less abrupt hikes in the coming months. However, the central banker recalled that the moderation of these hikes is "much less significant" than knowing "how much more we will need to raise rates and how long it will be necessary to keep monetary policy in tight territory" to bring inflation back to the 2% target.
Meanwhile, the market is awaiting the appearance of Rostin Behnam, chairman of the Commodity Futures Trading Commission (CFTC), who will initiate a congressional inquiry into the FTX bankruptcy conducted by the US Senate Agriculture Committee.
"Any other evidence or new news that comes out could influence Bitcoin´s price. What traders want to see is the FTX team being taught a lesson so that we never see this kind of behavior in the industry in the future," stated Naeem Aslam, chief markets analyst at AvaTrade.
Meawhile, Sam Bankman-Fried, founder and former CEO of FTX, acknowledged in an interview with 'The New York Times' that his mistakes led the platform to bankruptcy, although he also stated that he never intended to commit fraud and that the platform's collapse is due to a series of market events.
As for the rest of the 'altcoins', there have been outstanding gains for Polygon (MATIC), which rose almost 5% in the last 24 hours. Ripple (XRP) trades slightly lower, while Dogecoin (DOGE) retreats 3%. Solana (SOL), meanwhile, remains bullish and rises 0.65%, although it could be affected by further negative news about FTX.
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