Ethereum pares gains, Bitcoin pushed under $40K as Fed set to reveal tapering plans


Ether (ETH) and Bitcoin (BTC) withdrew on July 28 as investors expected new guidance from the Federal Reserve.

ETH price slipped by 0.57% to $ 2,857, while the BTC / USD prices rose 0.68%, changing hands at $ 39,739 around 10:30 EST. However both pairs reached their current levels after a downward correction of their respective daytime highs of $ 2,391 and $ 40,925 respectively.

0d105d80 e2ee 4e71 ae6a eab3d3db9b06
Ethereum and Bitcoin trends in recent history. Source:

Traders increased their exposure in the cryptocurrency market after Tesla’s Elon Musk, Ark Invest’s Cathie Wood and Twitter’s Jack Dorsey spoke in favor of Bitcoin during the B-Word Conference last week. More tailwinds have come amid speculation about Amazon’s plans to accept BTC as payments, a rumor the retail giant has since denied.

Ether, whose 30-day correlation with Bitcoin stands at 89% positive, along with Bitcoin. Their synchronized price trends continued in the New York trading session on Wednesday, just as markets waited for the Federal Reserve to reveal its tight plans.

Talk about narrowing down

U.S. central bank officials will conclude their two-day political meeting on Wednesday, with a statement scheduled to appear at 2 p.m. EST. Investors ’focus will be on signals from President Jerome Powell on how and when the Fed will begin rolling out its asset purchase program, and any possible change in their view of inflation.

In detail, the U.S. consumer price index grew to 5.4% year-on-year. As a result, even 54% of Americans think the U.S. economy is in a bad state, according to a survey conducted by the Related Press-NORC Center for Public Affairs Research.

But the Fed has scrapped higher consumer prices, calling them “transient” in nature. As a result, Powell said in his congressional statement earlier this month that the central bank will continue its program to buy a $ 120 billion bond a month, causing concerns that it will cause further inflation spikes, especially in the housing sector.

Brian O’Reilly, head of market strategy for Mediolanum International Funds, noted that there are no signs of inflation cooling in the previous sessions, so the Fed could just take a look at rising consumer prices if not put a break on their bond-buying program. He added:

“There will be no change, but they are in the stage when they start talking about talk of decline.”

What happens to Bitcoin, Ethereum later?

The biggest vulnerability of the Ethereum and Bitcoin markets is that their estimates may not continue without increasing the Fed’s liquidity.

Related: Bitcoin bull outlines 7 steps to more fiscal stimulus and higher BTC prices

Meanwhile, the strong support is that there is a large amount of capital sitting sideways to enter the market, with DataTrek Research Report noting that retail investors on Robinhood alone own $ 400 billion to enter markets during the next big dip. FRED’s Retail Money Fund also notes that retail investors own more than $ 1 trillion versus $ 643 billion in 2015.

63769b9a 5003 463c 9c4a 3c819c6d9ea2
Securities of Retail Fund Money show investors holding more than a trillion dollars. Source: FRED

“We live in an unprecedented time of fiscal and monetary stimulus,” noticed Anthony Pompliano, a prominent crypto lawyer and Pomp Investments ’partner, in one of his recent notes to clients. He added that investors will do so much better by investing money in financial instruments than holding money or negative-yield assets. He said:

“If our government and economic organizations continue to ban bear markets and ban market corrections through their intervention actions, then the market will only get higher and higher over time.”

Tim Frost, CEO of DeFi wealth platform Yield App, has raised concerns about analysts ’renewed positive outlook for Ether and Bitcoin.

He told Cointelegraph that markets could resume its downtrend after a “short rally,” in which Bitcoin falls to $ 20,000, lowering Ethereum together, adding that:

“Altcoin revival is a long way off. The crypto index of fear and greed is also still very distorted to fear – indeed over the longest period it has ever been distorted in that direction. This is not the beginning of a new bull. Run as far as it can. the bear’s capture surprises a nap. “

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Every investment and business move involves risk, you need to do your own research when deciding.