Crypto wrap: January Fed meet minutes pull Bitcoin back from six-month high

The minutes, released on Wednesday, said that the members believe "ongoing" rate hikes will be necessary

The last week was a mixed bag for cryptocurrency investors. Bitcoin touched a six-week high of $25,047 on Tuesday. But soon after the Federal Reserve released the minutes of its January meeting, the prices fell below $24,000.

The minutes said the members believe "ongoing" rate hikes will be necessary.

"Participants noted that inflation data received over the past three months showed a welcome reduction in the monthly pace of price increases but stressed that substantially more evidence of progress across a broader range of prices would be required to be confident that inflation was on a sustained downward path," the minutes said.

"After the meeting and underwhelming January minutes, Bitcoin fell further to the $23,600 level on Wednesday," said Alankar Saxena, CTO and co-founder of crypto management company Mudrex. On Friday, Bitcoin was trading at $23,851, according to coinmarketcap.

Ethereum, on the other hand, has proved itself as more resilient this year. It has been trading between $1,650 and $1,700 since the start of 2023. On Friday, it was trading at $1,649. The overall crypto market cap has also stayed above $1 trillion in the year. On Friday, it was $1.09 trillion.

Another takeaway from the market this week was the decoupling of the US markets and the crypto market.

"What is interesting to note is the short-term 'decoupling' between Bitcoin and S&P 500, as the much-touted narrative from last year of Bitcoin trading in sync with high-growth tech stocks seems to be losing steam. The correlation between Bitcoin and S&P 500 had shot up above 0.8 but is now down to around 0.3, suggesting that Bitcoin behaves like a unique asset class and can be considered for portfolio diversification," said Parth Chaturvedi, crypto ecosystem lead at crypto exchange CoinSwitch.

"The crypto markets have been decoupling from US indices, which is beneficial for the ecosystem," reiterated crypto platform Kunji's founder, Anurag Dixit.

What to expect next week?

According to Dixit, "Bitcoin is currently encountering significant resistance from the $25,300 region in the short term."

Saxena added, "Bitcoin's support level is $23,800, while resistance is $24,200...As investors await further developments in the global economic and financial landscape, the broader cryptocurrency market appears to follow a similar trend."