Bitcoin’s price has dropped to green after Federal Reserve officials reaffirmed on Wednesday their expectations of keeping interest rates close to zero at least until 2023, potentially reinforcing the cryptocurrency’s appeal as a hedge against faster inflation.
At the time of this publication, bitcoin was changing hands at around $ 58,000, against about $ 55,500 just before the Fed announced its decision at about 18:00, coordinated universal time (14:00 ET).
The price has doubled this year, in part because of the demand from institutional investors looking for an asset that can maintain its value if the dollar’s purchasing power falls. Central banks around the world have injected trillions of dollars of newly created money into global financial markets to stimulate their coronavirus-torn economies.
Wall Street firm Morgan Stanley’s wealth management unit on Wednesday published a research report arguing that the “limit is being reached” for cryptocurrency to become a class of investable assets. On the same day, Morgan Stanley said it would offer its customers exposure to three bitcoin funds, while Meitu, a Hong Kong-listed software company, made additional investments in bitcoin and ether.
“This is a high step towards greater awareness and acceptance of bitcoin and shows the underlying organic demand as investors look for alternatives to existing investment classes,” said Jason Lau, chief operating officer for the crypto exchange OKCoin, with San Francisco headquarters.
Ether (ETH) was up on Wednesday, trading around $ 1,824.79 and up 2.24% in 24 hours from 20:00 UTC (16:00 ET).
“Ether and bitcoin are still moving together,” said Lau of OKCoin.
At the same time, the number of BTCs blocked on the Ethereum blockchain saw a sharp rise on Wednesday, after falling for more than a month, according to data from DeFi Pulse.
“The hypergrowth that markets exhibited at the beginning of the year, especially with ether, appears to have subsided on the surface, but the reality could not be different,” said Denis Vinokourov, head of research at trade opinion data provider Trade the Chain. “Specifically, the number of bitcoins blocked on Ethereum continues to increase and much of that capital eventually reaches the DeFi ecosystem.”
A handful of smaller digital assets rose sharply on Wednesday after Grayscale announced plans for new funds linked to Chainlink’s LINK, Decentraland’s MANA and a handful of others. (Digital Currency Group is the father of Grayscale and CoinDesk and an investor in Decentraland.)
Bitcoin’s temporary failure to rise since Saturday’s historic high may also have led some investors and traders to alternative cryptocurrencies.
“While this may not be exciting for bitcoin traders, it has ether traders licking their lips with the prospect of the leading altcoin taking back part of the market,” said Adam James, senior editor at OKEx Insights. “Likewise, traders will also look for DeFi altcoins and governance tokens to capitalize on a bitcoin consolidation.”
The digital assets in CoinDesk 20 are mostly green on Wednesday. Notable winners from 20:00 UTC (16:00 ET):