The cryptocurrency market stabilized on Monday, January 26, as gold and the stock market rose and the US dollar index plunged ahead of the Federal Reserve’s upcoming interest rate decision.
Summary
- The cryptocurrency market pared some of its previous losses.
- Bitcoin price rose to over $88,400 from the intraday low of $87,000.
- The US dollar index fell to its lowest level since November.
Bitcoin (btc) moved from the intraday low of $87,000 to $88,400, while Ethereum (ETH) rose and approached the key resistance of $3,000. The market capitalization of all coins returned to $3 trillion.
Cryptocurrency Market Wavers as US Dollar Index Stumbles
Cryptocurrency prices stabilized as investors watched the performance of other assets. The stock market tilted higher, with the Dow Jones and S&P 500 indices rising more than 0.50%. This rally came as investors waited for the next earnings season of the 7 magnificent companies such as Tesla, Microsoft, Apple and Meta Platforms.
Silver and gold prices also continued to rise. Gold broke above the important resistance level of $5,000 for the first time, while silver held above the key resistance of $100.
However, the US Dollar Index (DXY) fell to its lowest level since September last year. The dollar has fallen more than 2.6% from its highest level this year as investors have begun to shift into gold.
Government and Federal Reserve Shutdown Risks
The next major catalyst for the cryptocurrency market is the upcoming interest rate decision from the Federal Reserve. Most Polymarket economists and traders believe that the bank will decide to keep interest rates unchanged between 3.50% and 3.75%.
The pause in rates will help officials assess the impact of the last three interest rate cuts on the economy. Furthermore, the pause will be necessary as the economy is doing well and the unemployment rate continues to stabilize. Inflation has stabilized near the 2% target and analysts believe the economy expanded 5% in the fourth quarter after growing 4.4% in the fourth quarter.
The cryptocurrency market will also react to the upcoming partial government shutdown. Polymarket data shows that the chances of a closuren have risen to more than 70% as concerns about ICE and the Department of Homeland Security increase.
A possible macroeconomic risk is in the Middle East, where Donald Trump has sent an armada. The odds of a possible attack against Iran in supermarkets have continued to increase. An attack would lead to higher oil prices and risk of inflation.
