On Wednesday, while the dollar was weakening due to increased expectations of dovish signals from the Federal Reserve, Bitcoin achieved a three-week high, and Ethereum reached its best level since the merge.
By 22:27 ET, Bitcoin was up 4.6% to $20,201, trading above $20,000 for the first time in three weeks, while Ethereum was up 10.7% to $1,485, a one-and-a-half month high (02:27 GMT). Gains in both tokens reflected the cryptocurrency market’s overall upswing as the dollar declined.
How Much of a Rate Hike to Expect?
Markets are factoring in the possibility that the Fed would moderate its aggressive approach in response to a significant downturn in the US economy. The central bank should increase rates by 75 basis points in November. However, traders are making a wager that the bank will reduce the rate of rate increases the following month.
Tuesday’s data revealed that US home prices dropped in December. The number came after PMI data revealed a prolonged downturn in September’s industrial activity in the United States. The dollar has fallen over the previous four sessions due to the possibility of a less aggressive Fed. On Wednesday, the dollar index and dollar index futures traded at almost two-week lows of 111, remaining unchanged.
A narrow trading range that had been present for the previous two months was broken by the crypto markets thanks to dollar weakness. But just as with other breakthroughs, it’s unclear if the market can continue to move upward. Reports that some affluent Asian investors purchased cryptocurrency, mainly Bitcoin, boosted the markets.
The value of the biggest cryptocurrency in the world increased last month to $22,700 before dropping to almost yearly lows. This year, when the Fed tightened monetary policy, the token and the larger crypto market experienced significant losses. Along with the current dispute with the Securities and Exchange Commission, regulatory improvements to the cryptocurrency industry are also in the spotlight.