Bitcoin and Ethereum: Hawkish dip or dovish high?

Bitcoin traders would be wise to consider the macroeconomic calendar today, with the latest round of minutes from the Federal Open Market Committee (FOMC) meeting due for release this afternoon.

The reality is, bitcoin is an emotional asset class that is inclined to react strongly to short-term macro events; crypto volatility is one of its drawing cards after all.

There’s no telling what the contents of the FOMC minutes are, but in the most rudimentary of explainers: Hawkish Fed policy makes cash appreciate, bitcoin go down; Dovish Fed policy makes cash depreciate, bitcoin go up.

At least traditionally, though it should also be noted that the FOMC minutes may be past their use-by date before hitting the shelf, given the barrage of tight labour statistics and CPI numbers that have emerged since.

For now, the market appears generally upbeat.

BTC/USDT tests 25k – Source: binance.com

BTC/USDT added 2.3% on Monday, closing the day above US$24,800, and the pair has continued to move in the right direction, currently hovering just below the psychological US$25k line.

It’s no coincidence that BTC has seen a bit of rejection on the one-hour chart at this point, given that day traders probably cashed out their winnings at this point.

If momentum manages to push BTC past 25k, expect traders to cash out at US$25,100 and US$25,200, where the Binance order book shows large walls of selling pressure.

Ethereum (ETH) added 1.4% to close a few dollars above US$1,700 yesterday and has stayed there this morning.

Ether pivots on the same macro conditions as bitcoin, but the second-largest cryptocurrency by market capitalisation has a few other spanners in the works right now.

US regulators have been coming down hard on staking services; this has no effect on bitcoin but a potentially huge effect on ether.

On the bright side, since The Merge, ether has turned into a deflationary currency, i.e. less ether is being minted than burned, which can only be a good thing for its price.

However, the ETH/BTC pair has been in a steady downturn for the past two weeks; investors seem more inclined to bet on the benchmark over the alternatives at the moment.

This is exemplified by the increase in bitcoin dominance from 43.22% on February 8 to 44.4.% today.

In the altcoin space

Polygon (MATIC), Solana (SOL) and Polkadot (DOT) remain the top week-on-week performers in the large-cap space, all of which remain over 20% higher despite losing some ground overnight.

Neo, Stacks (STX) and Huobi Token (HT) were among the top overnight risers in the top-100 set.

Global cryptocurrency market capitalisation is currently US$1.13tn, while total value locked across all decentralised finance (DeFi) protocols is sitting at a three-month high of US$51bn.