The head of the U.S. central bank told the Senate Banking Committee the Fed would continue its tactics to combat rising inflation.
Bitcoin went up as high as $43,106 on Tuesday, leading a broad market recovery in crypto. The move came after the stock market in the U.S. halted its five-day rout ahead of the Consumer Price Index (CPI) data release on Wednesday.
At the time of publication, the most valued cryptocurrency was changing hands above $42,800, up over 2% in the past 24 hours, according to CoinDesk data.
Bloomberg reported the stock market climbed on Tuesday after Jerome Powell, the chair of the Federal Reserve, reassured investors the Fed will combat the current high inflation, signaling the central bank may reduce its balance sheet this year.
As CoinDesk reported, bitcoin and the broad crypto market have behaved strongly like a risk asset recently.
A key event to watch on Wednesday is the release of December’s U.S. consumer price index (CPI). Economists anticipate a 0.5% month-to-month increase in CPI to 7.1%.
In the past two months, bitcoin’s price experienced high volatility after the CPI data release. While some crypto traders and investors view bitcoin as a hedge against inflation, others consider it as a risk asset like stocks, which react to tightened monetary policy resulting from high inflation.
Most other major cryptocurrencies also rose on Tuesday. Ether, the second-biggest cryptocurrency by market capitalization, was up over 5% to above $3,200, at the time of publication. Layer 1 token NEAR remained the biggest winner. It is up nearly 13% over the past week despite the crypto sell-off.
Bitcoin (BTC) went trading above the $40,000 support level and was up about 3% over the past 24 hours from 9 p.m. UTC. Buyers are starting to return to the market, although the upside appeared to be limited to the $45,000 resistance level, which is also near the 200-day moving average.
On intraday charts, upside momentum is improving, which suggests buyers could remain active into the Asia trading day.
BTC is the most oversold since Dec. 10, according to the relative strength index (RSI) on the daily chart. Typically, oversold readings precede price recoveries, similar to what occurred in late September. This time, however, price reaction to the RSI and other indicators have been delayed.
Still, on the weekly chart, the RSI is not yet oversold, which decreases the chance of significant buying pressure.
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