Bitcoin holds onto 10% gains ahead of crucial Fed rate hike comments

After a rebounding stock market propelled the largest cryptocurrency above $37,500 on Tuesday, Bitcoin (BTC) held on to new highs.

Fed may spark fresh volatility

On Tuesday, data showed BTC/USD trading above $36,000, with maximum 24-hour gains of 14% over Monday’s low.

The relationship between Bitcoin and equities remained a hot topic ahead of a new Wall Street open and significant interest rate data from the US Federal Reserve.

The Federal Open Market Committee (FOMC) of the Federal Reserve is scheduled to convene on Wednesday, and any announcement on interest rates could have immediate ramifications for both traditional and crypto markets.

“The Federal Reserve’s FOMC meeting tomorrow could cause a lot of volatility this week,” Cointelegraph contributor Michal van de Poppe predicts.

The Fed’s asset purchase tapering will be followed by rate hikes, and Bitcoin sentiment has already taken a knock as the end of “cheap” liquidity approaches.

However, asset purchases should be completed by March, and the Fed has stated that rate hikes should not occur before then.

“After becoming a poster child of speculative inflationary excess in 2021, price reversion in cryptos is likely to spread in 2022, but Bitcoin stands to come out top,” Mike McGlone, chief commodity analyst at Bloomberg Intelligence, summed in a positive prognosis for BTC.

“Correlations are approaching one-to-one.”

McGlone previously stated that once markets experience a long-overdue fall of up to 20%, Bitcoin might return better than stocks. Now, he adds that altcoins are unlikely to make a strong comeback.

Major altcoins wipe out earlier fall

Altcoins, on the other hand, had a strong day, with Ether (ETH) matching Bitcoin’s gains.At the time of writing, ETH/USD was trading at $2,420, up 7.3 percent from its lows of $2,160, its lowest level since mid-July.

Other large-cap cryptocurrencies, including as Binance Coin (BNB) and Solana, have had a V-shaped recovery as well (SOL).

“The good news is that we’re coming closer to the next altcoin impulse rise, since most of them have been fully retracing,” van de Poppe argued before to the surge.