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SOL, AVAX Lead Crypto-Market Recovery, Bitcoin Tops 50-Day Average Before Fed Meeting

(28 Views) January 30, 2024 1:26 pm | Published by | No comment

Altcoins’ consistent positive performance over the past six days is boosting optimism and setting up bitcoin to test $46,000, one analyst said.

The total crypto market capitalization has bounced to $1.74 trillion from $1.61 trillion in a week, with alternative cryptocurrencies (altcoins) like (SOL)(AVAX), and (ICP) spearheading the recovery.

According to Velo Data, Solana’s SOL has risen 27% to $103, nearly reversing losses seen following the Jan. 11 debut of spot-based bitcoin exchange-traded funds (ETFs) in the U.S. The rally comes amid surging user interest in Solana-based trading aggregator Jupiter, where volumes topped the $500 million mark on Monday, surpassing the activity on industry-leading decentralized exchange Uniswap.

AVAX, the native token of Ethereum rival Avalanche, has rallied over 25% in one week, while tokens such as ICP, NEAR, DOT, and XMR have added between 13% and 22%.

Bitcoin (BTC), the largest cryptocurrency by market value, has gained nearly 10% to trade above the widely tracked 50-day simple moving average at $42,870. Crossovers above and below that level are said to signal the strengthening of bullish or bearish momentum.

Ethereum’s native token, ether (ETH), the second-largest coin, has risen just 0.6%. The underperformance likely stems from market makers trading against the direction of the price move, thereby arresting the upside price volatility.

“Altcoins’ consistent positive performance over the past six days is setting up optimism, setting up bitcoin for a test of $46,000,” Alex Kuptsikevich, a senior market analyst at FxPro, said in an email. “The outperformance in major altcoins points to a broadening of participant interest beyond the two largest coins.”

Kuptsikevich said bitcoin’s move above the 50-day average is important, but not yet solid evidence of a bullish trend, and the outperformance of altcoins may be short-lived.

“Don’t expect sustained demand for smaller altcoins or meme coins this year – it usually happens after a prolonged bull market,” Kuptsikevich noted.

The U.S. Federal Reserve will announce its rate decision on Wednesday at 19:00 UTC. Half an hour later, Chairman Jerome Powell will speak at a press conference, explaining the decision and policy path.

The central bank is likely to keep the benchmark borrowing cost between 5.25% and 5.5%, with markets now anticipating a first rate cut in May instead of the previously expected March.

The focus will be on how fast policymakers intend to unwind the 11-rate-hike streak or the so-called policy tightening that began in March 2022 and peaked in June 2022.

“The market is sensitive to the Fed’s tone, with a dovish [policy easing] shift potentially boosting risk appetite and directing more capital into Bitcoin and related ETFs,” Tagus Capital said in its daily newsletter on Tuesday.

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