Crypto prices could still rise, even if the Fed hikes rates, Grayscale says

Quick Take

  • Grayscale said Monday that crypto prices could still benefit if the Fed hikes rates on Wednesday, as long as the decision aligns with what the market is expecting.
  • That said, bitcoin could still be susceptible to “a number of sentiment-driven factors.”

With the price of bitcoin bouncing around a bit before the U.S. Federal Reserve's latest interest rate decision on Wednesday, Grayscale said Monday that crypto prices may still be in a position to benefit if rates go up — as long as whatever happens align with market expectations. 

The price of bitcoin declined 4.3% on Monday and is currently trading around $27,990, according to TradingView data. Bitcoin recovered from lows of the day after MicroStrategy reported results and said the conviction on its bitcoin strategy remained strong. 

The price of the world's largest cryptocurrency by market capitalization has fallen about 1.8% over the past month but is still up 69% year-to-date. The U.S. central bank is expected to increase rates by 25 basis points, according to CME's FedWatch tool

Grayscale looks at bitcoin volatility

Pointing to volatility that occurred in the second half of April, Grayscale said that there were several noteworthy takeaways to keep in mind.

"Bitcoin may still be susceptible to a number of sentiment-driven factors that can be influenced by incorrect or incomplete information," it said, referencing a misleading Arkham alert. "The perception of actions by large holders can also have a consequential impact on Bitcoin’s value."

That said, Grayscale still said that factors including an additional rate hike and declining inflation "align well with a bullish case for Bitcoin in the future." The failures of several regional banks, meanwhile, demonstrate that "investors continue to display an appetite for crypto during times of economic uncertainty."

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