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Crypto wrap: Positive commentary from Jerome Powell keeps market stable

In the past week, the cryptocurrency market was volatile, but largely in the green. Bitcoin (BTC) rose over 3 per cent and was trading close to $17,000 at $16,970 on Friday. Ethereum (ETH) was up nearly 9 per cent and was trading at $1,280, according to coinmarketcap.

The cryptocurrency market fell in the earlier part of the week due to rising Covid-19 cases and the protests against lockdowns in China. But in the later part of the week, the market gained momentum after Fed chair Jerome Powell’s comments signaled a moderation in rate hikes in coming policy announcements.

“Monetary policy affects the economy and inflation with uncertain lags, and the full effects of our rapid tightening so far are yet to be felt. Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting,” Powell said.

The Fed will announce its policy on December 14.

“The downward movement was owing to the protests in China and coincidental bankruptcy filing from BlockFi. The upside move was fuelled by neutral to net positive commentary from the FED about upcoming rate hikes,” Anurag Dixit, founder of crypto asset management platform Kunji said.

“After collapsing in mid-November due to the FTX fiasco, BTC’s price is now back to the $17,000 level. Bitcoin and other cryptos rallied after Fed chair Jerome Powell’s speech that hinted that the central bank would slow down its interest rate hikes. However, they traded sideways on Thursday as Powell hinted at moderating the monetary policy…However, BTC is trading below its annual minimum peak of $17,500 in June” Alankar Saxena, co-founder and CTO of crypto investment platform Mudrex, said.

Several issues like the solvency of crypto exchanges Genesis and the status of missing money in the FTX fiasco, however, were left unsolved.

“…prices remaining range-bound, even though the contagion effect of the FTX debacle continues to lurk as a major unknown. SBF made his first public appearance since the bankruptcy, showing remorse for his actions but giving highly controversial comments on the corporate affairs at FTX and Alameda. The suspense on Genesis and DCG’s solvency issues continued to drag…,” Parth Chaturvedi, crypto ecosystem lead of crypto investment platform CoinSwitch, said.

“Amongst Altcoins, it was Dogecoin’s week to shine, with the token price surging nearly 25 per cent during the week and entering the Top 5 market capitalisation coin list with >$14 billion valuation,” Chaturvedi added.

On Friday, Dogecoin was trading at $0.093, 21 per cent up in the last seven days.

What to expect in the coming week?

“If bulls can move above the $17,500 holding on to it, we could see BTC at the $18,000 level soon,” Saxena said.

“Ethereum was seen changing hands above the $1,270 level. The next target for ETH bulls would be at the $1,350 level,” he added.

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