Daily News | Fed Ends Tightening Cycle; BTC and ETH Rise as SEC Removes "Digital Asset" Definition and Global Stocks Decline
Crypto Daily Digest: Bitcoin and Ether climb as Federal Reserve ends tightening cycle; PacWest Bancorp stock drops and SEC removes “digital asset” definition
Bitcoin (BTC) rose slightly by 1.5% to $29,065, while Ether (ETH) climbed nearly 2% to around $1900 in the past 24 hours.
The US Federal Reserve has completed its monetary tightening cycle that lasted for over 14 months. This resulted in an increase of interest rates 10 times, bringing the federal funds rate to 5.25%. While some investors believe that further interest rate increases may be necessary, the Federal Open Market Committee (FOMC) has suggested that 5.25% is appropriate.
However, reduced trading volumes for Bitcoin (BTC) and Ether (ETH) suggest that investors are being cautious, and digital assets have decoupled from traditional assets, indicating that the impact of monetary policy on digital assets may be different from that on stocks. Nevertheless, perpetual funding rates for BTC and ETH remain positive, and whales are accumulating both assets, suggesting bullishness.
In contrast, PacWest Bancorp’s stock plunged over 50% following news that the bank is considering strategic options. Despite this, JPMorgan CEO Jamie Dimon and Federal Reserve Chairman Jerome Powell have expressed their confidence in the stability of the banking . Nonetheless, other regional bank stocks such as Western Alliance Bancorp and Metropolitan Bank have experienced a decline.
Meanwhile, the US Securities and Exchange Commission (SEC) removed the first formal definition of “digital asset” from its latest hedge fund rule. Despite its previous focus on the crypto sector, the SEC had initially included the definition in its 2022 proposal to overhaul mandatory disclosures for hedge funds, but later removed it from the final rule. The regulator stated that it is still contemplating the term “digital assets” and may adopt it later. However, SEC Chair Gary Gensler regularly mentions digital assets in his speeches, indicating that the agency is still focusing on the crypto sector.
Bitcoin (BTC) $29063 (+0.14%) - Neutral Outlook
The current situation in the cryptocurrency market suggests that Bitcoin (BTC) is increasing in value with low trading volume. This indicates that the current phase of BTC accumulation is not over yet. It also means that there may be another round of decline in the near future to allow smart investors to accumulate more BTC at a lower price. This can create a false sense of pessimism before the price of BTC increases, establishing the “Path of Least Resistance.” Using the dynamic Wyckoff logic approach on the 3-hour timeframe, there is a possibility of a significant rejection in BTC’s value between the range of 29620 to 29950. If this occurs, smart investors may target a range between 27235 to 26700 to accumulate more BTC. This goes without saying, it is essential to be cautious of another bull trap.
Overview:
- Closest hourly support zone: 28880 - 28675
- Closest hourly resistance zone: 29300 - 29477
- Key Level: 29300 (Monthly High of Dec. 2020)
Hourly Resistance zones
- 29300 - 29477
- 29620 - 29950
- 30470 - 31015
Hourly Support zones
- 28880 - 28675
- 28582 - 28412
- 28215 - 28019
Macro: Interest Rate Hike Sparks Stock Declines, Powell Resists Rate Cuts Despite Bond Market’s Easing Signal
On Wednesday, the US Federal Reserve announced a quarter-point increase in interest rates, bringing the target range to 5% to 5.25%. This is the seventh hike in the last 18 months, marking the highest level since 2007. The decision was unanimously supported and reflected “very strong” backing, according to Chair Jerome Powell.
Despite Wall Street’s initial excitement about a potential pause in the Fed’s aggressive tightening campaign, stock prices dropped as Powell pushed back on interest rate cuts for now. The heart of the problem for the US economy remains inflation, and the bond market is indicating a significant easing in monetary policy before the end of 2023. The Fed omitted a line from its previous statement in March that said it “anticipates that some additional policy firming may be appropriate.” However, Powell emphasized that any future increases would be assessed based on incoming data, and warned that household and business credit was tightening.
The news of the interest rate hike caused declines in US stocks, with Asian stocks expected to open lower on Thursday. Australian bonds and the yen rose, while oil extended its slump. The $370 billion exchange-traded fund tracking the US equity benchmark (SPY) also experienced volatility in late trading. Later in the day, the European Central Bank is expected to announce its decision on raising the deposit rate by a quarter-point to 3.25%.
While Powell hinted that this hike may be the last of an aggressive tightening campaign, he did not rule out future increases entirely. He added that the bank could tolerate a “mild recession,” but did not believe one would happen. The economic outlook remains uncertain, with the Fed keeping a close eye on inflation and other economic indicators to guide future policy decisions.
