Bitcoin prices remain at less than one-third their all-time high from about a year ago.
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Bitcoin
and other cryptocurrencies were slightly lower Wednesday as markets awaited a key decision from the Federal Reserve that is likely to spur a big swing.
The price of Bitcoin has fallen less than 1% over the past 24 hours to below $20,500, having hovered around this level since a rally a week ago carried it out of the $19,000 to $20,000 range in which it had stagnated for about two months.
“Bitcoin might end up settling in the $19,500 to $21,000 trading range until the Fed decision,” said Edward Moya, an analyst at broker Oanda.
A correlation between cryptos and stocks has strengthened this year amid a tough macroeconomic environment of high inflation, rising interest rates, and recession risk. The Federal Reserve’s hawkish shift on interest rates has made the returns on risky bets like digital assets and equities less attractive, slamming token prices as well as indexes like the
Dow Jones Industrial Average
and
S&P 500
this year.
That’s why the Fed decision due at 2 p.m. Eastern—followed by a press conference from Fed Chairman Jerome Powell—is so important. Investors already expect the central bank to deliver another super-sized 75-basis point rate hike, but are hoping that Powell will signal when and how the Fed will begin easing off its aggressive tightening of financial conditions, perhaps as early as next month.
However, “aggressive rate hikes might have to stay on the table a little while longer and that could prove troubling for risky assets such as Bitcoin,” said Moya. “It seems like Wall Street might have to wait until the New Year for the Fed to downshift, which means Bitcoin could be vulnerable to finish the week lower.”
Beyond Bitcoin,
Ether
—the second-largest token—dropped 2% to $1,550. Smaller cryptos or altcoins were weaker, with both
Solana
and
Cardano
down 5%.
Dogecoin
plunged 15% as the speculation-fueled rally in the so-called memecoin gave up gains notched over the past few days of wild trading, while fellow meme token
Shiba Inu
tailed behind to shed 11%.
Write to Jack Denton at jack.denton@barrons.com
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