Bitcoin increased over $23,000 as hopes of milder Fed action fuel the crypto relief rally

July 21, 2022: -Bitcoin shattered the $23,000 threshold for the foremost time in over a month, as hopes of a rate hike being less aggressive than the Federal Reserve feared triggered a relief rally in cryptocurrencies.

On Wednesday, the world’s biggest cryptocurrency increased as high as $23,800, up 8% in 24 hours and trading at levels not experienced since mid-June. According to Coin Metrics data, it was the final trading for $23,330.80.

Traders took comfort from the prospect of milder policy action from the Fed at its future rate-setting meeting.

The tighter monetary policy effects from the U.S. central bank have weighed high on risky assets such as stocks and crypto. Bitcoin is still roughly 50% since the start of 2021.

“This isn’t necessarily crypto bear market end, but a relief rally for Bitcoin’s overdue,” Antoni Trenchev, CEO of crypto lender Nexo, said.

“Bitcoin is starting to find its feet after a shaky month, and the coming week will be telling,” Trenchev said.

The U.S. central bank is expecting to hike swiftness again at its future policy meeting, but economists are forecasting a milder increase this time of 75 basis points instead than 100.

Cryptocurrencies were said as a source of value uncorrelated with traditional financial markets. But as institutional capital is pouring into digital assets, that thesis was not successful in materializing once the Fed started to increase interest rates and traders fled equities.

A rally beyond $22,700 meant the cryptocurrency had recovered its 200-week moving average, which lays the technical groundwork for a “trend reversal,” said Yuya Hasegawa, the crypto market analyst at the Japanese crypto exchange Bitbank.

“The market needs a little assurance for deceleration in the pace of rate hike by the Fed,” he says. “Nevertheless, a short-term outlook for bitcoin is bullish, and it could go up to about $29k this week.”

Therefore, traders are betting that the worst of an intense market contagion caused by liquidity issues at a few large crypto firms has likely subsided.

Digital currencies that were under tremendous which sells pressure in the past months, as the collapse of a few notable ventures caused ripple effects in the market.