Bitcoin bump lifts solana and cardano as crypto tokens rally

Solana is spearheading an altcoin rally, as investors bet on the US Federal Reserve pausing rates at the central bank's next meeting on December 13.

Bitcoin (BTC-USD) has been on a sustained rally since mid-October, but in the past week, altcoins have outperformed the world's largest digital asset by market capitalisation.

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Solana (SOL-USD) has made the most gains, posting a rally of over 10% in the past 24 hours. The altcoin is now changing hands for $64.83 (£52.28), as of the time of writing.

Coming hot on its heels is cardano (ADA-USD), rallying over 9% in the past 24 hours, now priced at $0.40. Both altcoins are the native tokens of layer 1 'smart contract' blockchains that are essentially rivals of the Ethereum network (ETH-USD).

Solana professes to be able to settle transactions faster and at a fraction of the cost compared to the Ethereum network. However, analysts argue that the former achieves this by compromising some of its overall security.

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The global cryptocurrency market capitalisation now stands at $1.48tn, up 4.5% change in the last 24 hours. Bitcoin is eyeing the $38,000 mark, reaching a height of $37,900 in the past 24 hours. The largest digital asset by market capitalisation is now changing hands for $37,318, according to data from CoinGecko.

Investors anticipate another Fed rate pause

The latest indications on the CME Group’s FedWatch gauge show a 100% probability that the Fed will maintain its target rate within the current range of 5.25% to 5.50% at its next meetings. The Federal Reserve Open Market Committee (FOMC) is set to announce the US central bank's next monetary policy decision at a meeting on December 13.

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Driven by recent indications that both consumer and wholesale inflation rates have eased considerably from their mid-2022 peaks, data on the CME Group’s FedWatch also points to a full percentage point of rate cuts by the end of 2024.

Analysts point to signals the Fed may be softening its overall ambition to reach an annual inflation goal of 2%. “What we decided to do is maintain a policy rate and await further data. We want to see convincing evidence, really, that we have reached the appropriate level,” Fed Chair Jerome Powell said at his post-meeting news conference in September.

Markets may be projecting the end of Fed rate hikes. Major stock indices have gained this week. US stocks closed slightly higher on Wednesday, as fresh inflation data reinforced anticipation among investors that the Fed could be done raising interest rates.

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