Bitcoin floating above $43k as Fed decision looms

Tuesday witnessed a modest decline in equities as investors navigated market uncertainties influenced by the anticipation of big tech earnings and cautious signals from Federal Reserve officials.

Meanwhile, cryptocurrencies presented a mixed picture, amidst a week packed with key earnings reports and the looming Federal Reserve decision on interest rates set for Wednesday.

Bitcoin bounced modestly Tuesday, hovering around $43,500 after dipping below the $40,000 level late last week. Ether traded sideways Tuesday morning, but both cryptocurrencies were able to maintain their recovery path after a disappointing few weeks.

Bitcoin (BTC) is now up around 3.3% over the month and ether (ETH) has gained 1% in the same time period. Analysts are growing cautiously optimistic that upcoming tailwinds will propel bitcoin higher.

“Will bitcoin hit a $20,000 bottom this year, as some analysts and — notably — Deutsche Bank’s recent survey predicts? I would say unlikely,” Lucas Kiely, chief investment officer of digital wealth platform Yield App, said. “The big story this year is about crypto maturing into a stable market that combines the benefits of DeFi with best practice from [traditional finance].”

The latest Job Openings and Labor Turnover Survey (JOLTS) data, released after the open Tuesday, showed there were an estimated 9.026 million job openings in December, a slight increase from November and higher than analysts had anticipated.

After clocking record highs on Monday, the S&P 500 and Dow Jones Industrial Average slipped at the open on Tuesday, losing 0.1% each. The Nasdaq Composite also dipped, falling 0.4% in the first hour of trading.

Monday’s equity rally, analysts say, is largely thanks to a late-afternoon Treasury announcement that quarterly borrowing estimate by roughly $56 billion.

“We know that was the key positive catalyst because stocks accelerated the rally during the final hour and sectors that benefit most from falling yields (small caps and tech) outperformed,” Tom Essaye, founder of Sevens Report Research, said. “Specifically, the Treasury only needs to borrow $760 billion in Q1 compared to the previously estimated $816 billion.”

The Federal Open Market Committee will wrap its two-day policy-setting meeting Wednesday and futures markets Tuesday morning showed there is an overwhelming expectation that rates will stay where they are. Future market moves will depend on Chair Jerome Powell’s comments and the statement from the Committee, Essaye said.

“There’s virtually zero chance of a rate cut at tomorrow’s meeting,” he added. “What will make this meeting hawkish or dovish (and push stocks lower or extend the rally) will be whether the Fed hints that rate cuts are coming soon.”

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.