Bitcoin remained stable on Wednesday even though the majority of the top alternative cryptocurrencies or altcoins had plummeted.
BTC / USD rose 0.3 percent to $ 10,816 apiece by 0423 GMT over an adjusted 24 hour period. In comparison, Ethereum, which ranks second after Bitcoin, fell 4.09 percent. Other tokens, including XRP, Polkadot, Bitcoin Cash, BNB, and Chainlink, also fell 3 to 10 percent.
The opposite sentiment was evident as Bitcoin Dominance – a barometer used to measure the market capitalization of the benchmark cryptocurrency versus the rest of the crypto market – continued to creep back to higher levels. As observers noted, the BTC.D chart was looking for a breakout of its own, despite not being a tradable instrument.
The latest green candles in the graph above showed an inflow of capital from the neighboring altcoins into the Bitcoin market. This is despite the massive downward revision of the cryptocurrency from its annual high of $ 12,486 that was set in early August. Two catalysts explain how Bitcoin managed to stay above $ 10,700 even as competing tokens fell.
# 1 FOMC September Meeting
How Bitcoinist reported earlierBitcoin anticipated bullish moves before the Federal Open Market Committee's two-day monetary policy meeting closed on Wednesday. Traders waited for more details on the Federal Reserve's plans to offset interest rates against their 2 percent inflation target.
The US Federal Reserve's decision will be made at 1800 GMT, followed by a press conference by its Chairman Jerome Powell.
Observers expect that Fed wants to keep its key rates lower for an extended period of time to continue to support the US economy through the COVID-19 pandemic. Lower interest rates keep downward pressure on the US dollar and bond yields. They thus increase the attractiveness of comparatively riskier assets such as gold, stocks and even Bitcoin.
The US dollar index fell 0.03 percent ahead of Wednesday's FOMC meeting.
If the Fed can't believe its long-term plans, uncertainty alone could lead to a minor correction in the Bitcoin market. Nomuras Lewis Alexander explained that a recent surge in production and jobs data could deter the central bank from sharing overly reserved tones.
"Recent comments from FOMC attendees suggest that a consensus for a stronger, results-oriented forecast or significant changes in asset purchases is still a long way off," he said in a note released earlier this week.
# 2 MicroStrategy is buying more bitcoin
The short-term risks have not stopped major investors from investing fresh capital in the Bitcoin market.
MicroStrategy, a US publicly traded company, announced On Tuesday, the company bought additional BTC units worth $ 175 million for its reserves. This was the company's second largest investment in the crypto space. It had shifted $ 250 million into Bitcoin last month.
On September 14, 2020, MicroStrategy completed the purchase of 16,796 additional bitcoins for a total purchase price of $ 175 million. To date, we've purchased a total of 38,250 bitcoins for a total purchase price of $ 425 million including fees and charges.
– Michael Saylor (@michael_saylor) September 15, 2020
Michael Saylor, co-founder of MicroStrategy, had previously stated that they had decided to invest in Bitcoin to protect their reserves from the dollar's devaluation. However, the cryptocurrency's hedge history against the FOMC meeting helped maintain the $ 10.7,000 support.