Bitcoin and other major coins failed to find upward momentum on Tuesday evening as the global cryptocurrency market cap fell 1.6% to $1.7 trillion at press time.
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Why It Matters: Cryptocurrencies were lagging other risk assets like stocks, which flashed green ahead of an expected rate hike by the U.S. Federal Reserve.
S&P 500 and Nasdaq futures rose 0.1% and 0.2%, respectively, at press time. The Federal Reserve is expected to raise its fed funds target rate by half a percentage point on Wednesday. Also on the cards is a tapering of bond purchases by $95 billion a month, according to a CNBC report.
The greenback is under pressure ahead of the possible rate hike. The dollar index, a measure of the U.S. currency’s strength against six others, was unchanged at 103.46 at press time. The index is off of its Thursday highs of 103.93 when it touched a 20-year peak.
The simmering down of the dollar was construed as a positive for risk assets by cryptocurrency trader Michaël van de Poppe.
Let’s see how the Dollar is going to act after tomorrow.
The primary scenario for me is still something like this, resulting into an upwards bounce on risk-on assets. pic.twitter.com/RcUX2QESgO
— Michaël van de Poppe (@CryptoMichNL) May 3, 2022
Van de Poppe sees the dollar index retreating to the 100 levels in a chart that he shared on Twitter. “Let’s see how the Dollar is going to act after tomorrow,” said the analyst alluding to the conclusion of the Federal Open Market Committee meeting due Wednesday.
OANDA Senior Market Analyst Edward Moya said Bitcoin is in a “wait-and-see mode.”
“Bitcoin is struggling to muster up a rally as investors remain cautious about buying risky assets. Bitcoin needs a fresh catalyst as sentiment on Wall Street remains fairly downbeat,” wrote Moya, in a note seen by Benzinga.
Santiment pointed out that there are “significant” battles playing out between bulls and bears on both the Bitcoin and Ethereum sides.
#Bitcoin and #Ethereum are seeing significant battles between #bulls and #bears during the ongoing #FOMC meeting. Our latest insight covers the falling wedges on both $BTC & $ETH charts, as well as rising lows in terms of $BTC active addresses. https://t.co/N60zBRHrlH pic.twitter.com/jdsBWXwjZg
— Santiment (@santimentfeed) May 3, 2022
Pointing to falling wedges on the charts of Bitcoin and Ethereum along with rising lows of Bitcoin active addresses, the behavior analysis platform said in a note, “We might see the final capitulation, which is a healthy sign.”
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