Cryptos await Powell; Bitcoin tepid at $22,400
Little movement and lukewarmness in cryptocurrencies. Bitcoin (BTC) turns slightly upward and rises 0.1% in the last 24 hours to $22,400. Ethereum (ETH), meanwhile, rebounds 0.5% and is back near $1,600.
Craig Erlam, senior analyst at Oanda, believes the reigning cryptocurrency managed to stabilize "quite quickly" after Friday's plunge ,as traders take stock of the situation at Silvergate Capital. "Fears naturally resurfaced following reports late last week and just as it seemed cryptos were moving past the FTX debacle. The question now is how widespread the ripple effects will be and how much it will undermine confidence in the space. Bitcoin had already been struggling to break above $24,500-$25,500 resistance and this has just made it that much harder," the expert noted.
In the crypto sphere there isn´t much more beyond what is already known. The negative headlines have undermined the market's optimism, with numerous analysts stressing that the worst is not only not over, but that any rebound could irremediably lead to a strong correction. This stance is echoed by analyst firm CryptoQuant, as it stated that funding rates for digital assets show that the market is clearly bearish and they are betting on further declines in the near future.
In the macroeconomic scenario, all eyes are once again on the Federal Reserve (Fed). Or, rather, on its chairman. Jerome Powell will appear today, on Tuesday at 4 p.m. before the Senate Banking Committee, where he is expected to reveal some clues as to what the Fed's next steps in monetary policy will be. He is also due to appear before policymakers again on Wednesday, this time before the House Financial Services Committee.
"Since the latest FOMC meeting, we saw a blowout NFP number, an uptick in inflation figures, lower-than-expected decline in the S&P500 earnings, and overall encouraging economic activity data. And that’s a problem," explained Ipek Ozkardeskaya, senior Analyst at Swissquote Bank.
The expert stressed that the fact that the US jobs market, or economic activity don’t react to higher Fed rates is a problem for the Fed. "It makes the Fed’s arms less efficient for fighting against inflation. Many would argue that changes in rates take time to filter into the economy but the Fed’s tightening campaign began in November 2021 - 17 months ago, the rate hikes began roughly a year ago. It’s about time we start seeing the impact of higher rates through data," he noted.
In this regard, there is some disparity among Fed members, with some like Bostic advocating staying at 25 basis points, while others like Bullard or Kashkari open the door to higher hikes than initially expected. CME's FedWatch tool gives a 27% probability of a 50 basis point hike on March 22. Upcoming data, such as the employment report due on Friday, may turn the current scenario upside down.
In other market news, there have been notable rises for Ripple (XRP) and Polygon (MATIC), of 2% and 3%, respectively. On the negative side, Cardano (ADA) fell 0.4%.