BTC sucks blood from ETH and causes it to fall into sideways trend. The Federal Reserve may provide assistance and promote the continuation of the bull market

• Bitcoin rallied above $11,000 ahead of the Federal Reserve’s two-day policy meeting.

• U.S. monetary policy makers will decide whether to keep their benchmark interest rate pinned near zero.

• There is a general consensus in the market that the Federal Reserve is unlikely to make any changes to its current easing plan.

• In the short term, the news could help Bitcoin continue its bull run.

Bitcoin staged a surprising bull run earlier this week, surpassing $11,000 for the first time in nearly 11 months.

The climb took Bitcoin to a staggering high of $11,500. However, the market subsequently entered a minor downside correction as traders awaited the Fed’s announcement on whether it would continue its easing program.

The United States is likely to maintain near-zero interest rates

To recall, the Federal Open Market Committee will hold a policy meeting on Tuesday and Wednesday, in which the committee will discuss the increasing number of COVID cases in the United States and how it threatens the recovery of the U.S. economy in the coming months.

The grim outlook will increase the likelihood that the Federal Reserve will take additional measures to calm investors. The Fed may keep interest rates near zero until the economy shows signs of a sustainable recovery. At the same time, the Fed's continuation of its bond-buying program will come at the expense of the dollar.

A weaker dollar this year has contributed to bitcoin's gains as it makes the cryptocurrency relatively cheap in international markets.

Ahead of the Fed meeting, the dollar index inched up 0.2% but still traded near two-year lows.

As for interest rates, the decision to keep them low will directly impact the main U.S. Treasury bonds. Any dovish policy will keep additional downward pressure on real yields. Interest rates fell below zero late last week, a move that prompted investors to seek higher returns in riskier assets.

This also helped gold climb to a new all-time high earlier this week. On the other hand, Bitcoin broke through the resistance range that has limited its upward movement for more than a year.

More support coming (Bullish for Bitcoin)

Lou Crandall of Wrightson Icap told the Financial Times that he expects the Fed to keep interest rates unchanged. The analyst noted that the central bank is still measuring the impact of the COVID recovery on the economy.

“That said, we would not rule out the possibility that the Fed is ready to signal that it will shift its (quantitative easing) purchases toward longer maturities once the autumn framework review is concluded,” he said.

Thomas Costerg, senior U.S. economist at Pictet Wealth Management, noted that the Fed’s tendency to “hold the trigger” will spur demand for safe-haven assets such as gold. This, in turn, will give Bitcoin more room to grow.

At the time of writing, according to QKL123, BTC is trading at $10,896, down 2.5%. ETH is trading at $315, down 2.59%. In this bull market, ETH followed DeFi, and then BTC followed ETH. But after Bitcoin's big rise this week, it seems to be sucking blood from the altcoin market, and ETH has failed to break through for two consecutive days. If ETH goes sideways, can BTC continue to move independently?

Link to this article: https://www.8btc.com/article/628519
Please indicate the source of the article when reprinting