Bitcoin holds onto 10% gains ahead of crucial Fed rate hike comments

Bitcoin (BTC), which gained new upside Tuesday following a rebound in the stock market, took the largest cryptocurrency over $37,000.

BTC/USD 1-hour candle charts (Bitstamp). Source: TradingView.

Fed may spark fresh volatility

Cointelegraph Markets Pro and TradingView data showed that BTC/USD traded above $36,000 Tuesday with maximum 24-hour gains of 14% compared to Monday’s floor.

The Bitcoin-equities correlation remained the focus of attention ahead of a new Wall Street open and key information about interest rates from US Federal Reserve.

Wednesday’s meeting of the Fed’s Federal Open Market Committee is scheduled. Any news regarding interest rates could immediately have repercussions on both crypto and traditional markets.

Michael van de Poppe, a Cointelegraph contributor, predicts that “Tomorrow’s FED FOMC Meeting could mean that there will be lots of volatility this week.”

The Fed plans to follow up on its asset purchase tapering with rate hikes. Bitcoin sentiment will take a hit as the end “easy” liquidity draws near.

Asset purchases must be completed by March. However, the Fed stated that rate increases should not occur before March.

“Price reversion is likely to spread to cryptos in 2022 after the assets were a posterchild of speculative inflationary excess in 2021 but Bitcoin stands out to come out ahead,” Mike McGlone chief commodity strategist at Bloomberg Intelligence summarized in a positive outlook for BTC.

“Correlations are moving towards 1-to-1.”

BTC/USD vs. S&P500 correlation chart. Source: Mike McGlone/Twitter

McGlone stated earlier this month that Bitcoin could recover faster than stocks if they experience a long-overdue correction up to 20%. McGlone said that altcoins will likely not make as strong a comeback.

Altcoins majorly wipe out fall earlier

Altcoins performed well on the subject of altcoins. Ether (ETH), however, was able to match Bitcoin’s advance.

Related: “Stop panicselling” — Bitcoin whales save BTC when exchange balances drop

The ETH/USD traded at $2,420 at the time of writing. It had previously fallen to $2,160, its lowest since mid-July.

BITSTAMP: ETH/USD 1-hour candle charts Source: TradingView.

On other large-cap altcoins with large caps, such as Binance Coin (BNB), and Solana(SOL), there was a similar V-shape recovery.

Van de Poppe stated before the rally that “the good part is that it’s getting closer and closer towards the next impulse rally for altcoins because most of them have retraced fully”.