Bitcoin resumed its push back towards US$30 000 and smaller digital tokens rallied as a broad renewal in risk appetite prompted investors to downplay a widening regulatory crackdown.
The oldest cryptocurrency gained as much as 5.2% to $28 812 as of 12.06pm in New York. Bitcoin traded just under $29 000 on Wednesday until the US Federal Reserve raised rates as expected. The token, which hasn’t traded at $30 000 since last June, has jumped about 70% this year.
Coinbase Global disclosed on Wednesday that it received a notice from the Securities and Exchange Commission formally declaring the regulator’s plans to bring an enforcement action against the largest crypto exchange in the US. In a separate action on Wednesday, the SEC sued crypto mogul Justin Sun for allegedly violating securities rules.
Among so-called altcoins, cardano jumped 5.3%, avalanche rose 6.3% and litecoin increased 7.7%. TRX, the token associated with the Tron network that Sun started, rose about 7.8% after slumping 12% on Wednesday.
Bitcoin “is basically following the broader markets, digesting the Fed, and basically bringing down some of the damage that was done yesterday”, said Ilan Solot, co-head of digital assets at Marex.
“The crypto market seems to have held a similar view to the bond market coming into the Fed meeting that there was an overwhelming likelihood of a 25bps hike and a small likelihood of standing pat,” said Stephane Ouellette, CEO at institutional crypto brokerage firm FRNT Financial.
Stabilised
The rebound in crypto follows an overall recovery in the equity market, with the tech-heavy Nasdaq 100 leading gains. The bond market also stabilised on Thursday after a surge that sent US treasury yields declining in the aftermath of the Fed’s decision. The Federal Open Market Committee voted unanimously to increase its target for the federal funds rate to a range of 4.75-5%, the highest since September 2007.
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“The move is notable but not excessive,” said Chris Newhouse, a derivatives trader at crypto investment firm GSR. “A move below $25 000 or above $30 000 probably would’ve seen increased volume in the derivatives markets and more speculative bets start to take place.” — Muyao Shen, with Carly Wanna, (c) 2023 Bloomberg LP