Ethereum cuts profits, Bitcoin pushed below $ 40,000 as the Fed announces plans to reduce the throttling
Ether (ETH) and Bitcoin (BTC) pulled back on Wednesday as investors waited for new guidelines from the Federal Reserve.
ETH price slipped 0.57% to $ 2,857 while BTC / USD prices rose 0.68% and changed hands at $ 39,739 around 10:30 a.m. EST. Still, both pairs hit their current levels after revising down from their respective intraday highs of $ 2,391 and $ 40,925, respectively.
Ethereum and Bitcoin Trends in Recent History. Source: TradingView
Traders increased their exposure to the cryptocurrency market after Tesla’s Elon Musk, Ark Invest’s Cathie Wood and Twitter’s Jack Dorsey spoke for Bitcoin at The ₿ Word conference last week. Further tailwind came amid speculation about Amazon’s plans to accept BTC as payment, a rumor the retail giant later denied.
Ether, whose 30-day correlation with Bitcoin is 88%, moved in parallel with Bitcoin. Their synchronized price trends continued into Wednesday’s New York trading session, just as markets waited for the Federal Reserve to announce its plans to reduce the throttling.
Speaking of rejuvenation …
US Federal Reserve officials will close their two-day monetary policy meeting on Wednesday with a statement scheduled for 2:00 p.m. EST. Investor focus will be on Chairman Jerome Powell’s signals as to how and when the Fed will begin to wind down its asset purchase program, as well as possible changes in its view of inflation.
In detail, the US consumer price index has boomed, reaching 5.4% yoy. As a result, according to a survey by the Associated Press-NORC Center for Public Affairs Research, up to 54% of Americans believe the US economy is in bad shape.
But the Fed has wiped out higher consumer prices by calling them “temporary”. As a result, Powell, speaking to Congress earlier this month, said the central bank would continue its $ 120 billion monthly bond purchase program and expressed concerns that it could cause further spikes in inflation, particularly in the real estate sector.
Brian O’Reilly, Head of Market Strategy at Mediolanum International Funds noted that there are no signs of inflation cooling in the upcoming meetings – buy program. He added:
“There will be no change, but they are at a stage where they are starting to talk about tapering.”
What will happen next to Bitcoin and Ether?
The biggest flaw in the Ether and Bitcoin markets is that their valuations may not be sustained without adding to the Fed’s liquidity.
Related: Bitcoin Bull Outlines 7 Steps To More Fiscal Incentives And Higher BTC Prices
Meanwhile, the strong foundation is that there is significant capital on the verge of market entry, with a DataTrek Research report finding that retail investors are holding $ 400 billion on Robinhood alone to get in on the next big slump. Fred’s Retail Money Fund also notes that retail investors hold over $ 1 trillion, up from $ 643 billion in 2015.
The monetary values of retail funds show that investors have more than $ 1 trillion at their disposal. Source: Fred
“We live in an unprecedented era of fiscal and monetary stimulus,” noted Anthony Pompliano, a prominent crypto advocate and partner at Pomp Investments, in one of his recent client notes. He added that investors would do much better if they invested money in financial instruments than they would hold cash or assets with negative returns. He said:
“If our government and business organizations continue to ban bear markets and prohibit market corrections through their intervention measures, then the market can only go higher and higher over time.”
Given that 20% of the American public knows BTC well enough to hold it, and at current growth rates, shitting #Bitcoin will be political suicide for the next few years.
– Willy Woo (@woonomic) July 28, 2021
Tim Frost, CEO of DeFi wealth management platform Yield App, weighed concerns about analysts’ renewed upward outlook for Ether and Bitcoin.
He told Cointelegraph that markets could continue their downtrend after a “brief rally” in which Bitcoin fell as low as $ 20,000 and Ether fell at the same time. He added:
“An altcoin revival is still a long way off. The Crypto Fear & Greed Index is also still heavily skewed towards fear – in fact, it has been skewed in that direction for the longest time. This is not so much the start of a new bull run as when the bear is taken by surprise while taking a nap. “
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