Cryptocurrency prices jumped on Thursday as investors studied the outlook for the Federal Reserve's rate-hiking campaign and the ongoing crisis in parts of the banking system.
The price of bitcoin rose 4.6% to $28,418.61, according to Coin Metrics. Ether added 4.9% to trade at $1,822.70. Chart analysts are looking for bitcoin's second weekly close above $25,200 to help decide where the cryptocurrency may go next.
Crypto rose alongside other risk assets. All three major stock indexes were higher, following their Fed-induced sell-off on Wednesday, when the central bank raised its benchmark lending rate another quarter point, and implied that the end of its inflation-fighting hikes could be near. Stocks and crypto sold off by the end of the day.
Traders were weighing the update from the central bank's latest policy meeting and "reconciling uncertainty with opportunity," said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs.
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"The Fed did what the market wanted and suggested that ongoing rate hikes may not be needed and acknowledged the deflationary work that the recent bank collapses would contribute towards inflation reduction," Jablonski said. "A Fed that is looking to pause should spell positive momentum for risk and growth assets like tech stocks and crypto. … In short, uncertainty remains in monetary policy, and the impact of rates on the economy in terms of whether or not we see a recession."
The market also appeared to shrug off news of what Oppenheimer called an "unhealthy regulatory climate" in crypto. Late Wednesday, Coinbase received a Wells notice from the Securities and Exchange Commission warning the company that it may have violated securities laws. On Thursday, the SEC issued an investor alert on crypto assets.
First Republic Bank, suddenly serving as a proxy for the health of U.S. banking, dropped another 6% Thursday, bringing its month-to-date decline to 90%.