Mar 22, 2023
Bitcoin Approaches $29,000 as Traders Bet on ‘Monster’ Fed Rally
(Bloomberg) -- Bitcoin pulled back from its highest price level since June and smaller cryptocurrencies slumped after the Federal Reserve’s interest-rate increase eased speculation that looser monetary policy would fuel demand for digital assets.
Other tokens associated with crypto entrepreneur Justin Sun dropped sharply after the US Securities and Exchange Commission charged him and three of his companies with offering and selling unregistered securities, as well as price manipulation. TRX, the token associated with the Tron network that Sun started, dropped around 12%. The price of BTT, a token associated with BitTorrent, fell by more than 1%.
Bitcoin fell 3.5% to $27,182 as of 4:39 p.m. in New York, after climbing to as high as $28,913 earlier. The cryptocurrency flirted with breaching $29,000 for the first time since June. Bitcoin has rallied about 60% this year. That comes on the back of last year’s 64% decline. XRP dropped 14%, after jumping 30% on Tuesday. Solana and Binance Coin both slipped 5%.
“Wow, the market is reacting violently to the latest hike,” said Kevin March, founder of crypto prime brokerage platform Floating Point Group. There was a “huge volatility and volume spike as investors realize that there’s nothing stopping the Fed from continuing to hike rates if the affected mid-sized lenders are going to keep getting bailed out.”
Crypto prices have surged anew in recent weeks amid turmoil in the US and European financials sector, to which three US banks have succumbed and which brought about the takeover of Credit Suisse Group AG by UBS Group AG over the weekend. Digital-asset proponents say that their industry is a beneficiary as investors realize that tokens are out of the reach of governments and are far removed from any of the issues occurring with different lenders.
The Federal Open Market Committee voted unanimously to increase its target for the federal funds rate to a range of 4.75% to 5%, the highest since September 2007, when rates were at their peak on the eve of the financial crisis. It’s the second straight rise of 25 basis points following a string of aggressive moves starting in March 2022, when rates were near zero.
The three companies the SEC named in its complaint were Tron Foundation, supporting the Tron ecosystem, BiTorrent Foundation and Rainberry, formerly called BitTorrent. Sun founded Tron, and then purchased file-sharing service BitTorrent and released a related token, BTT. The price of HT, a token associated with Huobi exchange where Sun is an advisor, dropped nearly 9%. Sun said in an interview earlier this year that he is the world’s biggest holder of HT.
The total value locked in decentralized-finance apps — which let people lend, borrow and trade — on the Tron blockchain dropped by more than 3% in the last 24 hours, to about $5 billion, in the last 24 hours, according to tracker DeFi Llama.
The SEC complaint, filed in the US District Court for the Southern District of New York, accused Sun and his companies of offering and selling TRX and BTT “as investments through multiple unregistered ‘bounty programs,’” which pushed people to promote the coins on social media. Sun also is accused of “orchestrating a scheme to artificially inflate the apparent trading volume of TRX in the secondary market.”
Sun, and representatives of Rainberry and Huobi didn’t immediately return requests for comment.
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