Bitcoin, ether build on recent gains as investors await Fed rate hike decision

Pedestrians walk past an advertisement displaying a Bitcoin cryptocurrency token on February 15, 2022 in Hong Kong, China.
Anthony Kwan | Getty Images

Cryptocurrency prices were slightly higher Tuesday as investors braced for the conclusion of the Federal Reserve's two-day policy meeting on Wednesday.

Bitcoin was trading back above the $28,000 level, after slipping below this threshold the previous day. It rose more than 1.3% to $28,239.75, according to Coin Metrics. Ether advanced 2.4% to $1,799.12.

Investors are looking forward to the latest policy decision to come out of the Fed's March meeting, which will conclude Wednesday afternoon. Many investors are anticipating that the central bank will raise interest rates by 25 basis points.

As of Tuesday afternoon, there is about a 83% chance of a quarter-point increase by the Fed, according to CME Group's FedWatch tool. The other roughly 17% anticipates there will be no hike and that Chairman Jerome Powell may start to ease his aggressive tightening campaign amid fears of emerging financial contagion.

While some investors have chalked up the recent crypto rally to dwindling confidence in centralized institutions like Credit Suisse and Silicon Valley Bank, many others maintain that inflation and Fed policy remain the biggest catalysts for the price of bitcoin.

BTIG's Jonathan Krinsky said bitcoin has been "a beneficiary of the banking issues," but that it's "showing upside exhaustion signals on both daily and weekly timeframes, and into what should be very heavy resistance in the 28k-30k range."

Bitcoin is now up about 21% for the month, and up about 70% for 2023.