Monday, June 5

Bitcoin and stocks remain volatile hours after new FED interest rates are known

The volatility of assets such as bitcoin (BTC) and stocks continues today, January 24, a few hours away from knowing when the US Federal Reserve Bank (FED) will set interest rates. After a corrective week, Bitcoin shows a slight rebound of 1.85% in 24 hours, which takes it back to USD 36,900.

the market of bitcoin had a turbulent week, in which it lost 23.5% of its value in US dollars. Its price moved from USD 43,000 to lows of USD 33,200. The fluctuations showing movements highly correlated with those of stocks, such as Nasdaq, which fell 9.44% in 5 days, while 55 companies listed on the stock exchange show losses of 10% or more from their highs.

An analysis sent by Goldman Sachs to its clients this weekend indicates that the Fed could establish a more aggressive policy than economists expected to control inflation, which would have caused fear in investors. As CriptoNoticias reported, the US closed 2021 with an annual inflation of 7%, the highest in the last 40 years.


According to figures from CoinMarketCap, the price of bitcoin today rebounded to $36,900, after falling to lows of $33,200 over the weekend. Source: CoinMarletCap.

Goldman Sachs, one of the world’s largest investment banks, foresees that the FED will make at least 4 increases in interest rates in 2022. However, it warns that adjustments may be decided at each meeting of the US regulator, until it achieves its goal of controlling inflation.

Some analysts have pointed out that the FED may set the first increase in interest rates for next March, making highly leveraged investors’ debt more expensive (which make investments with loans). This weekend’s correction took bitcoin 50% below its all-time high, CriptoNoticias reported.

The meeting of the US policymaking group is scheduled for this Tuesday, January 25 and Wednesday, January 26.

ATH Volatility and Correlation: Bitcoin Rebounds 6% and Stock Markets Recover Slightly

However, bitcoin and other markets experienced a rally on Monday afternoon. The BTC price moved 6% from its weekend lows, according to figures from CoinMarketCap.

Dow Jones moves in the same direction, recovering the $1 billion lost until yesterday, Sunday. For its part, Nasdaq, which had lost almost 3% in the morning, is also in the green, with a gain 0,28% at the time of writing.

The stock market, highly correlated to bitcoin, also saw momentum Monday afternoon. The Dow Jones recovered the USD 1,000 million lost in the last 5 days. Source: CNBC.

Bloomberg noted that the coefficient of 40 day correlation between Bitcoin and Nasdaq 100 is 0.66, the maximum since 2010. According to data from the firm, the correlation of the main cryptocurrency with the S&P 500 also marked all-time highs.

Analysts believe that the stock market could be showing signs of recovery, which would also boost the cryptocurrency market. In his opinion, the fall of bitcoin, which led the total cryptocurrency market to a collapse of USD 1,000 million, had its origin in the expectations of reduction of the stimulus granted by the FED due to the Covid 19 pandemic. But, the high correlation it will benefit the price of Bitcoin, at least temporarily.