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Bitcoin retreats from $24,000 as crypto investors await Fed rate meeting

Representation of Bitcoin cryptocurrency is seen in this illustration photo taken in Krakow, Poland on January 29, 2023. (Photo by Jakub Porzycki/NurPhoto via Getty Images)
Representation of Bitcoin cryptocurrency is seen in this illustration photo taken in Krakow, Poland on January 29, 2023. (Photo by Jakub Porzycki/NurPhoto via Getty Images) (NurPhoto via Getty Images)

Bitcoin (BTC-USD) withdrew from a weekend high of close to $24,000, falling into the mid $23,000 zone as crypto investors cautiously await this week's US Federal Reserve interest rate meeting.

Weekend buying pressure saw the crypto market turn optimistic ahead of Tuesday and Wednesday's meetings of the Federal Open Market Committee (FOMC).

Check: Crypto live prices

The market is poised in expectation that the US central bank will lift rates by 25 basis points, marking another slowdown from the 0.50% rate increase the Fed announced in December 2022.

This was in itself a step down from the 0.75% pace of rate hikes seen throughout 2022.

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On Sunday evening, bitcoin reached a high of $23,955, a 3% increase in 24 hours, before settling down to around $23,300 on Monday.

Ethereum (ETH-USD) rose nearly 5% over the weekend, to sit at $1,586 on Monday.

CoinDesk's Market Index spiked upwards 3.3% on Sunday, before dropping by 1.43% in an early Monday sell-off.

The expected 25-basis point rate hike by the Fed is seen as a positive sign, fuelling January's surge in crypto prices and other risk assets.

Over the weekend, bitcoin educator Dan Held said: "Bitcoin feels poised for a breakout."

Bitcoin usually tends to march in lockstep with equity markets, and the tech-heavy Nasdaq (^IXIC) and S&P 500 (^GSPC) closed higher on Friday, reaching its highest level in two months, despite job cuts by big companies due to economic contraction.

However, investors who wish to rush into what looks like a buoyant market have been warned to show restraint.

Morgan Stanley (MS) strategist Michael Wilson said in a note: “Better price action in stocks has started to convince many investors they are missing something, compelling them to participate more actively."

Read more: FTSE 100 opens lower ahead of Bank of England interest rate decision

He added: “We think the recent price action is more a reflection of the seasonal January effect and short covering after a tough end to December and a brutal year.”

Despite conflicting economic data and disappointing earnings reports, the market has remained buoyant due to favourable inflation news.

The US Commerce Department reported a moderate increase in personal consumption expenditures.

Watch: How ChatGPT could lead to 'mass technological unemployment' ⁠— The Crypto Mile

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