Cryptos continue to pare losses ahead of Fed decision
If all goes according to plan during tomorrow’s Fed rate decision announcement, risk-on sentiment could be back
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Bitcoin and ether continued to pare gains Tuesday while stocks trended upward ahead of Wednesday’s Federal Reserve decision.
Bitcoin posted mild losses Tuesday afternoon, positioning the largest crypto more than 5% lower over the past five days. Ether was trading around 2.3% lower Tuesday, also extending a mild selloff that started Monday.
Both cryptos managed to stay above key levels, though, with bitcoin (BTC) hovering around $41,000 and ether (ETH) sitting just below $2,200.
In the altcoin space, Solana, after increasing more than 22% in three days earlier this month, also cooled down Tuesday. The rally, spurred by Solana-based liquid staking protocol Jito’s governance token airdrop last week, appears to have cooled.
Jito’s JTO, which debuted at a price of $1.20 per token, gained as much as 261% last week before dipping to around $2.92 Tuesday.
Read more: What to know about Jito’s $165M JTO airdrop
Layer-1 protocol Aptos’ native token (ATP) soared as much as 17% Tuesday as 24.8 million, or 8.9% of its total supply, was unlocked. ATP’s market capitalization jumped more than 15% Tuesday to around $2.5 billion.
Last month, when Aptos unlocked the same amount of tokens, ATP’s price plummeted to a low of $6.70.
Aptos, which launched in October 2022, saw an increase of more than 200% in transactions between the second and third quarters of 2023, the blockchain said in a November 2023 update.
What to watch this week
Equities were modestly in the green again Tuesday, with the Nasdaq Composite and S&P 500 indexes posting gains of 0.5% and 0.3%, respectively.
Traders are anticipating the Fed to keep interest rates where they are and extend its current forward guidance Wednesday. They also expect the central bank to update its expectations to place interest rates at 4.876% by the middle of 2024. If all goes according to plan it should push prices higher, analysts say.
“As long as [Fed Chair Jerome] Powell isn’t too hawkish during the press conference, this outcome would likely spur a modest rally in stocks and could key a rally into year-end,” Tom Essaye, founder of Sevens Report Research, said. “To be clear, this outcome wouldn’t introduce anything new but it would remove the risk of a hawkish surprise and allow momentum to carry stocks higher into the end of the year.”
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