Bitcoin climbed to over $89,000 on Wednesday; however, it remained generally sideways with investors balancing the weaker dollar against gold prices and uncertainty over a major Federal Reserve policy decision that is due to be released on Wednesday afternoon. The largest cryptocurrency in the world was last seen at $89,235.8, which is 1.1% higher at 02:07 ET (07:07 GMT).
This increase in Bitcoin price is triggered by the weakening dollar effect due to Trump’s concerns regarding the greenback’s slide. The dollar has fallen to four-year lows, while gold has seen an incredible rally to new highs of over $5,200 per ounce, which adds appetite for alternatives to fiat currency. Even with these tailwinds, bitcoin has struggled to hold above this decisive breakout, trading between $88,000 and $89,000 in a relatively tight trading range.
The positioning of traders has remained light as they await clarity from the Federal Reserve regarding the future of interest rates in the United States and the relationship that the Federal Reserve has with political entities. When the Federal Reserve meeting will be held on Wednesday, it is widely expected that it will not raise the interest rate.
Traders will watch the statement provided at the conclusion of the meeting, as well as the comments made by Chairman Powell regarding when he expects the Federal Reserve to begin to cut rates.
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Given the fact that inflation is easing while the economy remains strong, many traders believe that the Federal Reserve may be able to lower rates soon. Lowering interest rates makes it cheaper for investors to hold non-yielding assets like bitcoin because it decreases the opportunity cost of holding those assets.
Traders are also closely monitoring the situation regarding Trump’s likely nomination of a new Federal Reserve chairman. Investors are trying to determine how much political influence could change the direction of the Federal Reserve.
The rise in Bitcoin’s price has also influenced the price of other cryptocurrencies, as most altcoins also increase after chasing Bitcoin’s gains. Ethereum, World no.2 crypto increase to $3,006.92, with a rise of 2.6%. Similarly, XRP, World no 3. Crypto reported an increase to $1.92, a rise of 1.1%. Solana also showed a slight increase while Polygon and Cardano gained 1.5% each. Dogecoin, a meme token, increased by 2.5%
