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Crypto markets rally on diminished Fed rate hike expectations

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Written by:
Myrsini Giannouli

01 February 2023
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Crypto markets rallied on Tuesday on diminished Fed rate hike expectations. The Fed monetary policy meeting on Wednesday will likely affect cryptocurrency prices. Market odds are currently in favor of a moderate 25-bp rate hike. A potential Fed shift towards a more dovish policy will likely benefit crypto markets, enhancing the current bullish trend.

Even though inflation rates remain high, cooling price pressures have reduced rate hike expectations, providing support for riskier assets. The Fed and other central banks are starting to scale back their aggressive rate hiking, raising hopes of a reversal in cryptocurrencies’ downfall. 

In addition, the International Monetary Fund revised its global economic growth outlook, easing recession concerns. According to the IMF World Economic Outlook, the global economy is expected to grow by 2.9% this year, raising optimism for economic recovery. 

The bitcoin price rose above the $23,000 level on Tuesday. If the BTC price declines, support can be found near $22,390, while resistance may be encountered near $23,900. 

Ethereum price also bounced back, touching $1,600 on Tuesday. If Ethereum's price declines, it may encounter support near $1,518, while if it increases, resistance may be located near $1,660.

Global cryptocurrency market capitalization has started to recover this year and remains above $1 trillion. Crypto bulls are hoping that the recent cryptocurrency selloff has passed and that market confidence in the industry will be restored. Bears are fighting back, however, pushing cryptocurrency prices down. 

BTC/USD 1h Chart

BTCUSD 1hr chart

 

ETH/USD 1h Chart

ETHUSD 1hr chart

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Written by:
Myrsini Giannouli

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