Bitcoin is trading sideways as investors await the outcome of a pivotal Federal Reserve meeting Wednesday afternoon.
The central bank, which will release a policy statement at 2 p.m. Eastern followed by Chairman Jerome Powell’s news conference at 2:30 p.m., is expected to announce a faster tapering of its bond purchase program. That, in turn, could set the stage for interest rate increases to begin as early as the second quarter of next year.
Read: It’s Fed day. Here are two big questions for markets from a trading veteran.
Bitcoin
BTCUSD,
was recently trading at around $46,970, down 0.02% over the past 24 hours. Ether
ETHUSD,
went down 2.55% over the past 24 hours, recently trading at around $3,688.
Facing macroeconomic uncertainties, bitcoin has fallen more than 30% from its all-time high of $68,991 in November. Ether is down more than 20% from its record high of $4,865.6.
“As bitcoin and the crypto market continues to mature and institutionalize, Fed regimes and macro events can have a greater impact on near term price discovery,” Louis LaValle, managing director at crypto fund manager 3iQ Digital Assets told MarketWatch via email.
See: 5 things to watch for when the Federal Reserve announces its policy decision Wednesday
If the Fed turns less hawkish than the market expected, major cryptocurrencies might rally, according to LaValle. “We’ve been in a risk-off environment in bitcoin and the crypto asset broadly over the last month, so if the FOMC (Federal Open Market Committee) meeting doesn’t make blockbuster headlines that could be a buying opportunity for those on the sidelines.”
“The Fed also is aware of its influence on markets,” LaValle wrote. “Previous attempts at reducing the balance sheet did not end so well – remember that they threw in the towel on rate hikes back in 2019.”
Read more: The crypto market is uneasy about the Fed meeting and high inflation. Here’s why
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