Market participants are eagerly awaiting the Federal Reserve’s interest rate decision, scheduled for Wednesday, as it could have a significant impact on the movement of cryptocurrencies. While many expect borrowing costs to remain unchanged, the possibility of a rate hike in November continues to influence investors’ decisions. Higher interest rates have had a negative effect on both Bitcoin and stocks since last year, as investors tend to shy away from risky assets when returns on risk-free cash or government securities are high.
Bitcoin’s price has been testing its 50-day moving average around $27,200, which serves as initial resistance. This pattern suggests a short-term oversold bounce while maintaining strong support around $25,200.
Traders, in anticipation of the Federal Reserve’s decision, have displayed a bullish outlook on Bitcoin perpetual futures. Binance, the world’s largest cryptocurrency exchange, reported a 3% increase in open interest (capital tied up in active derivatives contracts) over the past 24 hours. This rise follows a 14% surge on Monday, with bets favoring a bullish trend.
Other cryptocurrencies have also seen gains alongside Bitcoin. Ether, the second-largest cryptocurrency by market capitalization, rose just under 1% to $1,650. Smaller tokens like Cardano and Polygon experienced more significant increases of 2% and 3% respectively. Meme-based cryptocurrencies such as Dogecoin and Shiba Inu each advanced by 1%.
However, despite this optimistic trend in cryptocurrencies leading up to the Federal Reserve meeting, some market participants may be prematurely bullish. The current rally could potentially stall as there are no major economic data releases expected until the conclusion of the Federal Reserve meeting.
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