Bitcoin Holds 10% Gains Ahead of Crucial Fed Rate Hike Comments

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Bitcoin (BTC) held on to a fresh rise on Tuesday after a resurgent stock market took the biggest 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 24-hour maximum gains totaling 14% from Monday’s low.

Bitcoin’s correlation to equities remained front and center ahead of another Wall Street open and key US Federal Reserve interest rate news.

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

“Tomorrow’s Fed FOMC could mean we’ll see a lot of volatility this week,” Cointelegraph contributor Michaël van de Poppe forecasts.

The rate hikes are set to follow the Fed’s tapering of asset purchases, with Bitcoin sentiment taking a hit ahead as the end of “easy” liquidity nears.

Asset purchases, however, are expected to end by March and the Fed has said rate hikes should not occur before then.

“Price reversion to Cryptos is likely to spread in 2022, after the assets were a poster child of speculative inflation excess in 2021, but Bitcoin is likely to exit,” Mike McGlone, Chief Commodity Strategist of basis at Bloomberg Intelligence, summarized in a bullish outlook for BTC.

“Correlations are heading towards 1-to-1.” BTC/USD vs. S&P 500 Correlation chart. Source: Mike McGlone/Twitter

Earlier this month, McGlone said Bitcoin could rebound stronger than stocks once they see a long-awaited correction of up to 20%. Now, he added that altcoins are unlikely to make such a strong comeback.

Major altcoins disappear earlier in the fall

As far as altcoins go, they nonetheless put in a strong performance on the day, with Ether (ETH) matching Bitcoin’s advance.

Related: ‘Stop the Panic Selling’ – Bitcoin Whales Spare BTC Bag as Exchange Balances Plunge

ETH/USD was up 7.3% at the time of writing, trading at $2,420, after hitting a low of $2,160 – its worst since mid-July.

ETH/USD 1 hour candle chart (Bitstamp). Source: Trading View.

A V-shaped recovery was also noticeable on other large-cap altcoins, including Binance Coin (BNB) and Solana (SOL).

“The good part is that we are getting closer to the next impulse rally on AltCoinins as most of them have fully retraced,” Van de Poppe said ahead of the rally.

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