Cryptocurrency values have seen an upward trend this Tuesday, led by Bitcoin, the largest cryptocurrency by market capitalization. Bitcoin's value increased by over 1% in the last 24 hours, reaching $27,100. This surge allowed BTC to surpass the challenging $26,000 mark, a threshold that has been difficult to breach over the past month due to low volatility and trading volumes.
Market participants are closely watching the Federal Reserve's interest rate decision expected on Wednesday. The outcome could significantly impact the movement of cryptocurrencies. While many anticipate borrowing costs will remain steady, the potential for a rate hike in November continues to influence investors' decisions. Higher rates have had a negative impact on both Bitcoin and stocks since last year, as investors tend to avoid risky assets when returns on risk-free cash or government securities are high.
Bitcoin's price has been testing initial resistance at its 50-day moving average around $27,200. This pattern indicates a short-term oversold bounce while maintaining significant support around $25,200.
In anticipation of the Federal Reserve's decision, traders have shown a bullish outlook on Bitcoin perpetual futures. Binance, the world's largest cryptocurrency exchange, reported a 3% rise in open interest - capital tied up in active derivatives contracts - over the past 24 hours. This increase follows a 14% surge on Monday, with bets favoring a bullish trend.
Other cryptocurrencies have also experienced gains alongside Bitcoin. Ether, the second-largest cryptocurrency by market capitalization, rose slightly less than 1% to $1,650. Smaller tokens such as Cardano and Polygon saw more substantial increases of 2% and 3%, respectively. Meanwhile, meme-based cryptocurrencies such as Dogecoin and Shiba Inu each advanced by 1%.
However, despite this optimistic trend in cryptocurrencies ahead of the Federal Reserve meeting, some market participants may be prematurely bullish. The current rally could potentially stall as there are no major economic data releases expected until the conclusion of the Federal Reserve meeting.
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