On Wednesday, Bitcoin was still steady despite the decline of the majority of top alternative cryptocurrencies or altcoins. There are two reasons why it still managed to hold $10.7K as the altcoin market bleeds.
A barometer that determines the benchmark cryptocurrency’s market cap compared with the rest of the crypto market is called Bitcoin Dominance. As it crawled further back to higher levels, the polar-opposite sentiment appeared. In fact, observers are now saying that despite not being a tradable instrument, the BTC.D chart was looking for a breakout of its own.
There was a capital influx into the Bitcoin market from the neighboring altcoins. That happened even after all the cryptocurrency’s huge downside correction from its $12,486 yearly top established earlier in mid-August.
#1 FOMC SEPTEMBER MEETING
Bitcoin was expecting bullish moves ahead of the closure of the Federal Open Market Committee’s two-day monetary policy meeting on Wednesday, as reported earlier. Traders are waiting for more details regarding the Federal Reserve’s plans to balance interest rates against its 2 percent inflation target.
At 1800 GMT, the US central bank’s decision will come. Its chair, Jerome Powell, held a news conference.
Observers are expecting the Fed to maintain its benchmark rates lower for a more stretched period to help the US economy amidst the COVID-19 pandemic. Thus, they increase the appeal of comparatively riskier assets, like stocks, gold, and even Bitcoin.
Ahead of the FOMC meeting Wednesday, the US Dollar Index already dropped by 0.03 percent.
On the other hand, the uncertainty alone could cause a minor correction in the Bitcoin market. That would be the case if the Fed stays elusive regarding its long-term plans. Furthermore, a recent uptick in job data and manufacturing might keep the central bank from sharing overly dovish tones, as what Lewis Alexander of Nomura discussed.
#2 MICROSTRATEGY BUYS MORE BITCOIN
The big investors still injected new capital into the Bitcoin market despite the short-term risks.
On Tuesday, MicroStrategy, a public-traded US firm, released an announcement. It says that has purchased another $175 million worth of Bitcoin units for its reserves. That commemorates the company’s second-biggest investment in the crypto space. Moreover, last month alone, it had reallocated $250 million into Bitcoin.