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The Federal Reserve did not raise interest rates at its meeting on Wednesday, but it did imply that rates could remain higher for a longer period.
This decision may have triggered the sell-off in the equities markets: the S&P 500 is down more than 2% and the Nasdaq is down about 3% this week.
Bitcoin, on the other hand, demonstrated relative strength, holding at the same price of $26,600 as last week and outperforming over the past 30 days.
On-chain analytics firm IntoTheBlock, in a recent blog post, explains Bitcoin's recent outperformance relative to the equities market. The fact that Bitcoin and the major cryptocurrencies have managed to stay above their crucial support levels remains an encouraging sign.
At the time of writing, BTC was marginally down 0.13% in the last 24 hours to $26,568.
Key facts explaining BTC's steady price action
IntoTheBlock highlighted some key points that may explain Bitcoin's steady price. First, despite the DXY's surge, Bitcoin's correlation to the dollar has reached a value of zero, placing it in a solid position. Second, holders are reluctant to sell in advance in hopes of a Bitcoin ETF.
Third, Mt. Gox's payback, where they intended to compensate 850,000 BTC or $23 billion to consumers affected by the hack, was postponed by a year, thus reducing the selling pressure earlier anticipated.
Fourth, Bitcoin's dominance within the sector has been growing. In this regard, Bitcoin's market share has increased in recent weeks, surpassing 50% for the second time this year.
Fifth, the ratio of the market capitalization of Bitcoin to that of Ethereum hit a yearly high of 2.68x this week. Sixth, Bitcoin's steady price action might also have to do with its hodlers remaining calm.
Finally, "hodlers," or addresses that have been holding Bitcoin for more than a year, have continued to amass during the most recent weak market as they have in previous ones. Despite the recent pullback, the total balance held by hodlers — 13.44 million, or 69% of the supply in circulation — remains close to record highs.
Although it is uncertain how long Bitcoin's outperformance will endure in a deteriorating macro environment, IntoTheBlock pointed out that the above-mentioned trend may generally indicate that a bullish cycle for Bitcoin may be approaching.
Arman Shirinyan
Alex Dovbnya
