Cryptocurrencies saw a resurgence on Wednesday as investors grappled with the sluggish market during the summer season and anticipated the Federal Reserve’s annual meeting in Jackson Hole, Wyoming, scheduled for Friday.
Bitcoin displayed a more than 2% uptick, reaching $26,517.09. After a sudden dip below the $26,000 mark last week, the cryptocurrency had been hovering around this level and experienced its most challenging week since May. In a similar vein, Ether recorded an increase of over 3%, settling at $1,684.20.
Binance Coin, ranked as the third-largest cryptocurrency by market capitalization excluding stablecoins, enjoyed a 4% rise. Tokens linked to competitors of Ethereum also exhibited upward trends — Solana’s coin surged by 6%, Cardano’s gained 5.5%, and Polygon’s rose by 4%.
Interestingly, the crypto market’s upward movement paralleled gains observed in major stock averages. Notably, crypto assets experienced a more pronounced surge around noon ET, although the exact catalyst for this sharp shift remains uncertain.
Callie Cox, an analyst at the investment firm eToro, remarked, “You’re probably going to see some wild moves up and down as bitcoin tries to march back to $30,000. Add in summer trading volumes, and you have a recipe for day-to-day volatility. Bitcoin prices have been more resilient today on hopes for lower rates, and a few hours of stable trading could have been enough to bring buyers back in.”
Moreover, recent weeks have seen concerns within the market that Fed Chair Jerome Powell might deliver a more hawkish speech regarding potential rate hikes during the central bank’s Jackson Hole meeting. Some suggest that this concern might be manifesting in a “sell-the-rumor, buy-the-news” scenario.
Crypto markets have grappled with challenges since spring, dealing with low liquidity and thin trading volumes. These factors have exacerbated both upward and downward price movements, which has been particularly pronounced during the traditionally quieter month of August.
Sam Callahan, the lead analyst at Swan Bitcoin, highlighted, “The correlation between equity indices and bitcoin has declined to near zero in 2023. Bitcoin’s price appears to be bouncing after a sharp sell-off last week that was exacerbated by over $2.7 billion worth of liquidations of leveraged positions.”