Cryptos rally; Bitcoin recovers $27,000 and focuses on the Fed

Cryptocurrencies regain some bullish sentiment on Friday. Bitcoin (BTC) rises 1% in the last 24 hours and regains $27,000, while Ethereum (ETH) increases to $1,880.

"Bitcoin enjoyed a bit of a recovery last week but appears to have lost its way a little, falling over the last couple of days to trade back below $27,000," warned Craig Erlam, senior market analyst at OANDA. The expert points out that the key level "below remains $26,000 where it has now found strong support on two occasions over the last month." "Below that, $25,000 could offer an interesting test being a big barrier of resistance back in February," he added.

Nevertheless, the movement of digital assets in the market remains rather lethargic. This is despite the fact that the United States has managed to strike a deal on the debt ceiling. On Thursday, the Senate ratified the agreement between the White House and the Republicans by 63 votes in favor and 36 against, a result that, while serving to avoid deadlock, shows the deep disagreements on both sides with the text. Biden is expected to sign the legislation today, on Friday, and later address the nation.

"While the issue was expected ultimately to reach a satisfactory conclusion, there was nonetheless relief as the legislation avoids what would have been a disastrous US default. Attention will now revert to the other pressing issues of the day, most notably the next move on interest rates from the Federal Reserve," explained Richard Hunter, director of markets at Interactive Investor.

In this regard, recent comments from officials and recent Fed minutes clearly show the clear division of opinion that prevails within the Federal Open Market Committee (FOMC). According to CME's FedWatch tool, the consensus (75%) is clearly leaning towards the central bank keeping interest rates at their current level, while giving a 25% probability to a 25 basis point hike. A few days ago, the situation was quite the opposite.

Today´s May nonfarm payrolls data will give more clues about the direction the Fed could take. For Ipek Ozkardeskaya, senior analyst at Swissquote Bank, "a softer NFP figure, falling wages growth and higher unemployment ideally with a higher participation rate is what the Federal Reserve (Fed) needs to pause hiking." "But the loosening in the US jobs market hasn’t materialized just yet," she warned.

"And beyond the Fed’s June meeting? Well, we will see. The Fed clearly sends a message that they no longer see urgency in hiking the rates, while also letting investors know that their job fighting inflation is not done just yet. That’s a way of managing market expectations: pausing rate hikes, without however letting the market conditions loosen due to excess dovish speculation," the expert added.

In the rest of the market, there´s good sentiment among the main altcoins. Ripple (XRP) rises 2% and Polygon (MATIC) increases 1.4%. Solana (SOL) rises 1.7% and Litecoin (LTC) hikes 2.7%.