Crypto steps lightly into February

U.S. equity futures fell early Wednesday morning while the bulk of the cryptosphere shaded slightly green, a risk-asset mix tape that could soon turn more up tempo. Fast forward to this afternoon – when the Federal Reserve meets – and crucial remarks are made. Considered a certainty is a 0.25 percentage point rate hike, although keen-most focus will be heaped upon Chairman Powell's speech, likely to contain clues about the direction of rates looking out to the rest of the year.

Bitcoin was $23,065 when we looked at 8:02 a.m. (EST). It gained 0.6% in 24 hours. Cardano (+2%) was singularly exemplary within the ranks of the Big Ten.

The crypto world yesterday said hello to a new Cardano-based overcollateralized stablecoin, Djed, which attracted $10 million worth of ADA tokens in less than one day. Djed will be backed by other tokens and it will require as much as an 8-to-1 deposit ratio in terms of the value of posted collateral (CoinDesk).

Another altcoin connected with a blockchain and a stable – and on the move – is Fantom. CoinGecko's 42nd-largest coin, FTM gained 8% since this time yesterday. On Monday, Fantom said it was going to introduce an updated version of its fUSD stablecoin in a bid to give users (mostly developers building DeFi applications) flexibility when transacting. That is, they can pay their fees using a mix of fUSD and FTM. Over the past seven days, FTM has soared 37%.

Bitcoin just closed the books on one of its best months ever. BTC's 39.6% gain is the biggest month-of-January increase in a decade, while also representing BTC's biggest monthly surge since October of 2021. At that time, BTC gained 40% on the road to an all-time high of $69,000 reached that following November. At its lowest point this past November of 2022, BTC was $15,700.

The wildest portion of last month's rollicking rebound happened in mid-January, courtesy of a Friday afternoon options expiry at which time bulls stampeded. The final seven-day stretch of January was relatively calm for BTC price action.

February begins with BTC at a standstill. Said inertia comes amidst a calm-before-the-storm drop-off in spot market volatility that is expected to return with a vengeance later today when Fed Chairman Jerome Powell takes the stage.

Risk-asset traders pressed pause this morning as they await a Fed decision on rates and market tumult set to ensue as Powell deals out monetary policy tarot cards one precisely crafted sentence at a time, starting at 2:30 p.m. (EST). If Powell's speech signals, perhaps in an overtly harsh fashion, that a mythical pivot may not materialize any time soon, crypto markets could heave.

"Bad news out of the central bank has the potential to start February off on a sour note," Barron's said.

While overall market sentiment would not be described as bullish – not yet anyway – on-chain data suggests that BTC could be in the latter stages of a bear market, according to analysts interviewed by CoinDesk.

On-chain data shows short-term holders selling at a profit while long-term holders continue to hold massively, which taken together “looks increasingly bullish for BTC,” Glassnode said.

Meanwhile, crypto services provider Matrixport is unabashedly gazing quite a way out, toward the end of 2023. And, factoring in the next halving cycle, set for March 2024, the firm expects the price of the largest crypto to double by Christmas.