Bitcoin has surged above $29,000 following the 25 basis point Fed rate hike, a sign that the asset may be decoupling from equities.
Bitcoin has risen despite the Fed’s announcement of a rate hike
This is reported by the on-chain analytics company Sanitationthe cryptocurrency market has shown promising upside potential since the rate hike announcement went live.
Over the past year, interest rate hikes from the US Federal Reserve System (“Fed”) have generally been met with panic in the market, as coins such as Bitcoin and Ethereum have suffered significant price increases after them.
This is because the sector has experienced a high correlation with US equities during this period, meaning that the prices of the assets in the two sectors have evolved in a similar way.
However, lately things have been changing for the better as the cryptocurrency and stock markets have become increasingly separated from each other. The initial reaction in the prices of assets like Bitcoin and Ethereum to the latest announcement is also a positive indication of this.
Here is the comparison between BTC, ETH and S&P 500 that Santiment posted an hour after the FOMC meeting:
Looks like BTC didn't move much following the event | Source: Santiment on Twitter
As shown in the chart above, the S&P 500 fell shortly after the rate hike, while BTC and ETH remained stable, demonstrating the decoupling between the two sectors.
Both Bitcoin and Ethereum have since moved up in the hours, breaking the $29,000 and $1,900 levels respectively. This could be a sign that investors are comfortable now that the meeting is over.
“For now, it seems that the initial reaction to this rate hike was, “At least it’s over now. Crypto doesn’t have to worry about fiscal policy until June,” notes Santiment.
On-chain data also shows that trading volumes of major cryptocurrencies by market cap have increased since the meeting, an indication that activity in the sector has increased.
BTC's price has trended up since the announcement | Source: Santiment
Another indicator, the “active addresses”, which measures the daily total number of unique addresses participating in certain transaction activities on the Bitcoin blockchain, has also seen an increase following this Federal Open Market Committee (FOMC) meeting day, as the below chart highlights.
The indicator's value has been going up during the past day | Source: Santiment
This metric provides an estimate of the total number of unique users currently using the network, so if the value increases, it suggests that a lot of traffic has visited the chain in the past day.
The latest spike in active Bitcoin addresses is the highest in the past two weeks, with that of two weeks ago largely due to a sharp plunge in price.
“This rally seemed to have a lot more to do with the finally official rate hike, and you can see how active addresses jumped even higher right after the announcement,” the on-chain analytics company explains.
BTC price
At the time of writing, Bitcoin is trading around $29,200, up 1% over the past week.
BTC has surged in the past day | Source: BTCUSD on TradingView
Featured image by André François McKenzie on Unsplash.com, charts from TradingView.com, Santiment.net