Cryptos rally ahead of Fed statement, DOGE leads
- Fed’s stance on the timing of an interest hike to emerge at today’s meeting
- Crypto market cap has declined by more than $1 trillion in January
- Risky assets like tech stocks and crypto might correlate because the same investors own them
Fed meeting to reveal interest rate hike plans
The Fed’s stance on the timing of an interest hike might emerge at today’s meeting. Many observers expect this to happen in March. The US Central Bank has said it would tighten monetary policy with as many as four increases this year to control inflation, resulting in a global market selloff over the last several months.
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Bitcoin lost a quarter of value in January
Bitcoin has lost as much as a quarter of its value in the past month. In that time, the broader crypto market’s cap has declined by more than $1 trillion.
According to insiders, policy tightening might lead investors to flee into safer assets, resulting in additional losses to the crypto market. Senior FxPro analyst Alex Kuptsikevich told CoinDesk in an email:
If the regulator tightens its rhetoric and announces the upcoming rate hike as early as March, all risky assets, including cryptocurrencies, could suffer significantly.
Polygon and Near gained over 11% today
After a weekend dip, the market is starting to recover. Bitcoin, Solana (SOL/USD), and Ethereum have gone back to their price levels of last week. Some L1 blockchain tokens outside of the top 10 led cryptocurrency gains. For example, Polygon (MATIC/USD) and Near Protocol (NEAR/USD) have gained over 11% in 24 hours.
MATIC prices grew on news that ex-YouTube gaming head Ryan Wyatt had been appointed CEO of Polygon Studios. This is Polygon’s development arm, which supports the creation of NFTs and blockchain games on the Polygon network.
According to some analysts, risky assets like tech stocks and crypto correlate because the same investors own them. Haseeb Qureshi, founder of crypto investment fund Dragonfly Capital, told CoinDesk in a phone interview:
Crypto is owned by the same people that own growth stocks. When they start cutting risk, they cut back on crypto. That’s how the correlation is built.