The bitcoin price regrouped from its vicious weekend sell-off to recover past the $10,000 mark on Wednesday.
The dominant cryptocurrency had been in an uptrend for most of the day, and at approximately 10:00 am ET it managed to successfully pierce the $10,000 mark, which is generally considered to be a level of crucial psychological – if not technical – resistance.
Many cryptocurrency analysts remain bearish on the market’s short-term trend, fearing that the hype over the introduction of Facebook’s Libra project has given way to heightened – and perhaps unwelcome – scrutiny on Capitol Hill.
Consequently, it’s not clear whether today’s upward grind is sustainable.
Bitcoin last traded at $9,980 on Bitstamp.
Writing in market commentary shared with CCN, eToro analyst Simon Peters said that today’s upward move is “a mini-bump, nothing more,” and it’s disappointing given that it follows a US senator’s startling admission that the government couldn’t ban bitcoin, even if it wanted to.
“Today’s rises are a mini-bump, nothing more. It’s certainly not what crypto bulls would have been looking for after the US Senate admitted that banning Bitcoin is unlikely.”
Still, Peters expressed optimism that today’s Federal Reserve policy decision could catalyze a stronger crypto market rally. According to CME’s FedWatch Tool, the market is 100% certain that the Fed will reduce its interest rate target by at least 25-basis points, something it has not done since 2008.
“Trading volumes are pretty low currently and have been falling ever since the Fed started throwing out dovish comments on interest rates. This is a big test moment for crypto as we’ve never had a rate cut during bitcoin’s existence. I would expect a rise against the US Dollar if rates are cut, and a fall if they aren’t.”
However, other analysts aren’t convinced that an interest rate cut will have any impact on bitcoin whatsoever.
Commenting on the deluge of investors touting today’s FOMC meeting as a seminal event for the crypto market, Alex Krüger warned that “many crypto traders now live in an imaginary alternative reality.”
He further shared a series of charts demonstrating that past FOMC meetings have had virtually no correlation with bitcoin price movements. That contrasts with gold, which displays high volatility in response to Fed policy decisions.
Of course, the Fed has never cut rates during bitcoin’s decade-long existence, so bulls remain hopeful this time will be different.