Bitcoin holds onto 10% gains ahead of crucial Fed rate hike comments

Bitcoin (BTC) held onto fresh upside on Tuesday after a resurgent stock market took the largest cryptocurrency above $37,500.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView.

Fed may spark fresh volatility

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD trading above $36,000 on Tuesday, with maximum 24-hour gains totaling 14% versus Monday’s floor

Bitcoin’s correlation to equities remained in focus ahead of a fresh Wall Street open and key information regarding interest rates from the United States Federal Reserve.

The Fed’s Federal Open Market Committee (FOMC) is set to meet Wednesday, and any news regarding interest rates could have instant repercussions for both traditional and crypto markets.

“Tomorrow’s FED FOMC meeting could mean that we will see lots of volatility this week,” Cointelegraph contributor Michaël van de Poppe forecasts.

Rate hikes are planned to be the follow-on from the Fed’s asset purchase tapering, with Bitcoin sentiment taking a hit in advance as the end of “easy” liquidity nears.

Asset purchases should conclude by March, however, and the Fed has said that the rate hikes should not come before then.

“Price reversion in cryptos is likely to spread in 2022, after the assets were a poster child of speculative inflationary excess in 2021, but Bitcoin stands to come out ahead,” Mike McGlone, chief commodity strategist at Bloomberg Intelligence, summarized in a hopeful outlook for BTC.

“Correlations are heading toward 1-to-1.”

BTC/USD vs. S&P 500 correlation chart. Source: Mike McGlone/ Twitter

Earlier this month, McGlone said that Bitcoin could rebound stronger than stocks once they see a long-overdue correction of up to 20%. Now, he added that altcoins would likely fail to put in as solid a comeback.

Major altcoins wipe out earlier fall

On the topic of altcoins, these nonetheless put in a solid performance on the day, with Ethereum (ETH) matching Bitcoin’s advance.

Related: ‘Stop panic selling’ — Bitcoin whales bag spare BTC as exchange balances fall

ETH/USD was up 7.3% at the time of writing, trading at $2,420, having previous hit lows of $2,160, its worst since mid-July.

ETH/USD 1-hour candle chart (Bitstamp). Source: TradingView.

Something of a V-shape recovery was also noticeable on other large-cap altcoins, including Binance Coin (BNB) and Solana (SOL).

“The good part is that we’re getting closer and closer to the next impulse rally on altcoins as most of them have been retracing fully,” Van de Poppe argued before the rally.