Bitcoin, Ethereum, Dogecoin Fall On Fed’s Hawkish Tone

Bitcoin traded above the psychologically important $40,000 mark even as the apex coin and other major peers were in the red over 24 hours leading up to Thursday night. The global cryptocurrency market cap shrank 2.6% to $1.9 trillion. 

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Why It Matters: Bitcoin touched an intraday high of $42,893.58 but could not sustain upwards momentum, trading 5.7% lower from those levels at press time. Ethereum was below the $3,000 mark. 

Risk assets in general traded lower on Thursday, with the S&P 500 and Nasdaq shedding 1.5% and 2.1%, respectively. 

“The Nasdaq has had a more turbulent week which bitcoin has managed to shrug off; maybe a sign of it distancing itself from the link between the performance of the two,” said OANDA analyst Craig Erlam, in a note. 

“Whether it can sustain that we’ll see as there’s one thing both still have in common, they’re viewed as risky assets, albeit with bitcoin very much at the higher end of the scale.”

On Thursday, U.S. Federal Reserve Chair Jerome Powell said it was “absolutely essential” to restore price stability, according to a CNBC report. 

“We’re really going to be raising rates and getting expeditiously to levels that are more neutral and then that are actually tight … if that turns out to be appropriate once we get there,” said Powell. 

The statements from Powell could imply that the U.S. central bank may opt for a more aggressive 50 basis point rate hike instead of a 25 bps increase.

Irrespective of headwinds such as rising interest rates and the ongoing war in Eastern Europe, money is flowing into cryptocurrencies. This is setting the stage for a “strong recovery,” according to Glassnode co-founders Jan & Yann.

“$17bn VC [Cryptos] investments and +1k deals in 2022. This year has seen the highest median deal size at $4.5mn,” tweeted the Glassnode co-founders.

On the Ethereum side, the cryptocurrency’s address activity surged this week, according to Santiment. The financial market data platform noted that Wednesday’s 592,000 addresses were the “highest number of unique interactions in over a month.” 

$17bn VC #Cryptos investments and +1k deals in 2022. This year has seen the highest median deal size at $4.5mn.

Capital is flowing into #BTC and #altcoins, setting up for a strong recovery.  https://t.co/3CIPmzPbad pic.twitter.com/zPH8twH81W

— Negentropic_ (@Negentropic_) April 21, 2022

Social discussions surrounding the second-largest cryptocurrency have hit their highest level in two months, tweeted Santiment. 

#Ethereum‘s address activity really picked up this week, with Wednesday’s 592k addresses being the highest number of unique interactions in over a month. Meanwhile, social discussion for $ETH has hit its highest levels in over two months.  https://t.co/4xsQLD8VaN pic.twitter.com/2pwlN1lXUa

— Santiment (@santimentfeed) April 22, 2022

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