Bitcoin and Ethereum were mixed at press time on Wednesday evening, breaking away from other risk assets after the U.S. Federal Reserve’s policy meeting minutes came in line with expectations. The global cryptocurrency market cap fell 0.7% to $1.3 trillion.
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Why It Matters: Major cryptocurrencies like Bitcoin and Ethereum failed to overcome resistance at the key $30,000 and $2,000 levels even though other risk assets like stocks rallied on Wednesday.
The S&P 500 and NASDAQ ended Wednesday up 0.95% and 1.5%, respectively. At press time, S&P and NASDAQ futures rose 0.15% and 0.07%.
The Fed’s policy meeting minutes indicated participants were unanimous in their view that the U.S. economy was strong and further rate hikes in the 50 basis points region would be likely in the upcoming June and July meetings of the Federal Open Market Committee, reported Reuters.
“The FOMC minutes are over three weeks old, but they did give a glimmer of hope that they could adjust their policy tightening stance later in the year,” said Edward Moya, a senior market analyst with OANDA.
On Bitcoin, Moya said the apex coin was “struggling” above the $30,000 mark and that will be a “troubling sign if equities continue to stabilize.”
“If selling pressure resumes and the earlier lows made this month around $25,424 are breached, there isn’t much support until the $20,000 level.”
Chartist Ali Martinez pointed out that Bitcoin is near a point where the value of the BTC being mined and entering the ecosystem daily is extremely low.
#Bitcoin is about to hit a point where the value of $BTC being mined and entering the ecosystem on a daily basis is extremely low.— Ali Martinez (@ali_charts) May 25, 2022
Based on the Puell Multiple, #BTC is hovering around 0.54. Dipping below 0.50 has produced outsized returns for investors in the past. pic.twitter.com/tZDQaUVBE7
The Puell Multiple is the ratio of the daily value of Bitcoin issued in dollars divided by 365 days moving average of the daily value of Bitcoin issued in dollars.
In another key development, the beleaguered Terra (LUNA) cryptocurrency will see its second avatar launched on Friday. Most of the value of LUNA was eroded after the TerraUSD (UST) stablecoin associated with it lost its peg to the dollar earlier in the month.
GlobalBlock analyst Marcus Sotiriou noted that there are 10 confirmed projects for Terra 2.0 including Nebula, Spectrum, Anchor and Random Earth.
“There is a lot of value in these projects, and the synergies between these protocols create even more value, so despite the lack of trust in Terra, it could surprise a lot of people in the long term,” said Sotiriou.
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