Bitcoin Turns Bullish Again Amid Dovish Fed Forecast

Bitcoin has continued its bullish trajectory and is now trading above $38,000 per coin—for the second time in one week—following dovish comments from the Federal Reserve.

The biggest digital asset by market cap today hit a high of $38,223, according to CoinGecko. That’s a 3.5% 24-hour rise. Over seven days, it’s up nearly 3%.

Bitcoin last week blew past $38,000 per coin for the first time in 18 months. Before then, the cryptocurrency had generally traded below the $38,000 level ever since crypto mega project Terra collapsed in May 2022.

Now, a combination of optimism surrounding the approval of a Bitcoin exchange-traded fund (ETF) and  comments today from Federal Reserve governor Christopher J. Waller are leading to bullish price action.

On Tuesday, Waller said that while “inflation is still too high,” he was “increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2 percent.”

This is having a positive impact on Bitcoin as investors feel more confident to put their money into an asset which has typically struggled—along with other “risk assets”—with high interest rates.

James Butterfill, head of research at the European digital asset manager CoinShares, told Decrypt that “it appears that Waller’s remarks have favorably influenced Bitcoin prices,” adding that it indicate “a shift from the possibility of rate hikes, which were under consideration just two months ago.”

Bitcoin and the crypto market was hit hard after Terra collapsed last May. The blockchain project collapsed when its algorithmic stablecoin stopped working, which in turn led to widespread crypto contagion: a fall in the price of every coin and token and the bankruptcy of major digital asset companies that had exposure to the failed crypto venture.

But investors now appear to be feeling confident in investing in the digital asset industry—at least with Bitcoin. Most cash entering the space is focused on the biggest and oldest virtual coin and is coming from institutional investors, a CoinShares report yesterday showed.

Such investors are confident that the U.S. Securities and Exchange Commission will finally approve a Bitcoin ETF after a decade of waiting. Such a product would give traditional investors exposure to crypto and, according to some experts, lead to a flood of capital into the space.