FX.co ★ BTC recovers after bad week

On Monday, Bitcoin recovered after it declined the day before. By the time this article was written, the BTC price had reached $19,250.

According to CoinMarketCap, Bitcoin reached a high of $19,142 and a low of $18,619 over the past 24 hours.

At the end of the week, the asset decreased by 4.1% and closed the week at $18,900. At the same time, BTC updated three-month lows around $18,200 last Wednesday. However, later it resumed its growth.

The main reason for Bitcoin's dramatic collapse last week was the announcement of the outcome of the Fed's two-day September meeting on monetary policy.

On Wednesday evening, the regulator increased its key rate range by 75 basis points to 3.00-3.25%, the highest level since 2008.

The Fed also lowered its forecasts for US gross domestic product and raised its estimates of inflation and unemployment for 2022-2023. Moreover, US Central Bank officials said they would continue to reduce their holdings of Treasury and mortgage-backed securities and agency debt. The latest news from the US Federal Reserve gave investors an idea of the future prospects of the interest rate in the face of a permanently rising inflation rate.

Notably, the US Federal Reserve already raised its key rate by 25 basis points in March 2022. Moreover, it raised the rate by 50 and 75 basis points in May and in June respectively.

Meanwhile, recently experts of analytical company Kaiko reported that BTC volatility strongly depended on the outcome of the US Federal Reserve meeting.

Analysts at Kaiko believe that Bitcoin's high correlation with the Fed's decisions was recorded in the summer of 2021. This indicates that the cryptocurrency market has long been affected by key macroeconomic indicators.

When the US Federal Reserve increased the rate range to 0.75-1.00% in May 2022, Bitcoin hit the $40,000 level. However, it collapsed below $36,000 on the same day, entering a prolonged correction.

In June 2022, when the US regulator raised the key rate to 1.50-1.75%, BTC instantly reacted with a dramatic short-term growth to $22,000 and then collapsed significantly to $18,000.

The July rate hike to 2.25-2.50% triggered a sharp rise in major cryptocurrencies. Bitcoin then hit the $22,000 mark and Ethereum surpassed $1,500.

At the end of summer, BTC collapsed below $21,000 after Fed Chair Jerome Powell's speech.

Market analysts are confident that in the coming months the digital asset market will react more strongly to global central bankers' speeches as interest rate hikes often sharply reduce investors' ability to invest in risky assets such as virtual currencies.

Weak US stock market indicators also exerted significant pressure on BTC over the past week. On Friday, the Dow Jones Industrial Average index collapsed by 1.62%, the S&P 500 index sank by 1.72%, and the NASDAQ Composite index dropped by 1.8%.

Since the start of 2022, analysts have increasingly emphasized the high level of correlation between the US stock market and virtual assets. Moreover, they both focus on the consequences of the geopolitical conflict in eastern Europe and the US Federal Reserve's further steps.

Earlier, the experts of investment company Arcane Research already stated that the correlation of BTC and technological securities had reached a high since July 2020.

This situation looks rather ironic as cryptocurrency has always been positioned as a hedge against inflation and price volatility in traditional markets. However, in recent months, digital assets have been increasingly correlated with stock markets, raising doubts about the success of digital coins.

Altcoin market.

Ethereum, Bitcoin's main rival, began Wednesday's trading session with sideways movement and by the time of writing had reached $1,303. The day before, its price fell to $1,269, but later it returned to the area above $1,300.

As for the top 10 cryptocurrencies by market capitalization, all coins except several stablecoins, were trading in the red zone. Dogecoin was the top loser. It plunged by 2.7%.

At the end of last week, XRP coin topped the list of the top 10 strongest digital assets. It surged by 35%.

According to CoinGecko, the world's largest aggregator of virtual asset data, Terra Luna Classic (-17.2%) was the top loser among the top 100 most capitalized digital assets in the last 24 hours, while Tokenize Xchange (+7.6%) became the top gainer.

At the end of the past week, Evmos digital asset (-34.3%) was the top loser among the top 100 strongest digital assets.