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Crypto Update: Bitcoin trading ‘like a Ping-Pong’ match, says investor as Fed kicks off a series of interest rate hikes

Bitcoin inched up on Wednesday, after the Federal Reserve raised its policy rate by a quarter percentage point, the first rate hike since 2018, and signaled more to come.

The cryptocurrency
BTCUSD,
+0.15%

has gained about 4.4% over the past 24 hours to about $41,325, according to CoinDesk data. Bitcoin has been consolidating in the range of $37,000 to $42,000 for the past week.

“The initial derisking has already happened, which is reflected in the lower level of liquidations overall,” Michael Safai, managing partner at crypto prop trading firm Dexterity Capital, wrote to MarketWatch in an email. 

Ben McMillan, founder and chief investment officer at IDX Digital Assets, said that “I think a lot of bad news had already been priced in.”

“What we’re seeing is that bitcoin has been extremely rangebound these last few weeks with the onset of the Ukrainian conflict. It’s been like watching a Ping-Pong ball match, just kind of back and forth between support and resistance,” McMillan told MarketWatch in a phone interview. 

The Fed did not give details of how it will shrink its balance sheet, but Fed Chairman Jerome Powell said in a Wednesday press conference that runoff may start as soon as the next meeting on May 4.

The market has been pricing seven quarter-percentage-point interest hikes this year and it is “on the very hawkish side of things,” Tony Nyman, Informa Global Markets’s FX Fundamentals manager told MarketWatch in an interview. The Fed “can’t really go much more than that, unless they start doing the more aggressive 50 basis points moves, which historically, they don’t tend to do that much,” Nyman said. 

“But again, there is huge economic and global uncertainty at the moment surrounding prices outlook, surrounding Ukraine. So what I’d say [is] we have to stick with this hawkish notion, but there is probably room for disappointment on the hawkish side to hear,” according to Nyman. 

Joel Kruger, FX strategist at LMAX Group said that “I think that there’s really no conversation to be had about bitcoin moving up until we establish back above the February high. And that level comes in roughly around $46,000,” Kruger said. “Until then, the pressure is on the downside.”

U.S. stocks closed higher on volatile trade Wednesday. The Dow Jones Industrial Average
DJIA,
+1.55%

ended 1.6% higher and the S&P 500 
SPX,
+2.24%

gained 2.2%. The Nasdaq Composite Index
COMP,
+3.77%

 rose 3.8%.

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