The Federal Reserve hiked its interest rate by a half percentage point on Wednesday as it works to reduce its $9 trillion asset portfolio. Experts believe that this could bring a huge price surge for the two biggest cryptocurrencies (Bitcoin and Ethereum).
The decision, announced by Fed Chairperson Jeremy Powell following a two-day policy meeting, is the latest and one of the most dramatic Fed tightenings in decades, and is intended to mitigate the negative impacts of an economic boost that has resulted in high inflation.
Powell, who promised a “soft or softish” landing, also stated that rates would be raised in the coming sessions, claiming that the economy was strong and well-positioned to manage tighter monetary policy.
Despite producing ripples in the market over the last several days, with Bitcoin plunging below $38,000 as traders took profits ahead of the Fed meeting, today’s announcement boosted cryptocurrency prices.
Major coins rose in value two hours following the meeting, with Bitcoin jumping over 5.8% to $39,784. Ethereum increased by more than 6% to $2,957, with most altcoins increasing by more than 10%.
The daily chart of Bitcoin also showed an RSI positive divergence, indicating that bulls are preparing to reclaim control of the market. Santiment, a crypto on-chain analytics platform, sketched out a tight “wedge” pattern on the daily charts of Bitcoin and Ethereum on Tuesday.
Although Santiment cautioned against speculating on price direction, a falling wedge formation has historically been followed by a positive trend until price breaks out to the north of the tight squeeze.
As of this writing, this trend appears to have taken up nicely, with Bitcoin rising to touch the wedge’s top border.
The firm also pointed out several on-chain anomalies, particularly in the behavior of daily active addresses on both Bitcoin and Ether, and warned traders to be on the alert for anything. It shared a graph showing how, despite Bitcoin’s chart showing minimal activity, there was a massive spike in ETH network activity or a massive spike of hope.
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