Bitcoin rose on Tuesday morning in Asia to around US$26,700, after briefly breaching the US$27,000 resistance level on Monday evening. Ether also logged gains but remained below US$1,650. Most other top 10 non-stablecoin cryptocurrencies moved higher in the past 24 hours, with Toncoin leading the winners with a jump of more than 5%. The rally coincided with a rebound in crypto trading activities and expectations that the Federal Reserve will pause its interest rate hikes this week. U.S. stock futures traded flat after Wall Street closed near the flatline on Monday.

Bitcoin breached US$27,000 for the first time in September

Bitcoin rose 1.11% in the last 24 hours to US$26,778.93 as of 07:30 a.m. in Hong Kong and added 6.62% for the week, according to CoinMarketCap data. The world’s largest cryptocurrency surged on Monday evening to reach US$27,414.73 — the highest price since August 31, but soon retreated to below US$27,000.

The sudden rally in Bitcoin caught some investors off-guard, who had liquidated over US$44 million in Bitcoin positions in the past 24 hours, with over US$31 million of them in short positions, according to Coinglass data.

“Market activity seems to be growing again, after an abrupt decrease during summer months,” Matteo Greco, research analyst at Canada-based digital asset investment firm Fineqia International, said in an emailed note.

The cumulative daily volume on centralized exchanges from Sept. 10 to Sept. 17 reached US$11.3 billion, marking a 19% increase from the 7 days before, noted Greco.

“With the end of summer and the resumption of normal trading activity, the market is likely to see increased volatility again, after BTC reached the minimum volatility levels ever recorded on a 30-day basis during the first two weeks of August,” Greco said.

Along with Bitcoin, Ether rose 1.20% to US$1,638.41 and moved up 5.90% for the week. The second top cryptocurrency reached US$1,667.93 on Monday evening, which was also the highest price since August 31.

“Beyond the macro tilt that left risk assets little changed, yesterday, it seems that BTC and ETH continue to outperform relative to altcoins,” said Justin d’Anethan, head of Asia-Pacific business development at Belgium-based crypto market maker Keyrock. 

On the regulatory front in the U.S., the New York State Department of Financial Services (NYDFS) on Monday proposed an updated guideline for crypto exchanges, which includes more strict rules on listing and delisting cryptocurrencies, cutting the list of pre-approved cryptos from two dozen to only Bitcoin and Ether as well as six stablecoins.

“This probably pushed investors to rotate into safer assets within the crypto space,” said d’Anethan.

Most other top 10 non-stablecoin cryptocurrencies logged gains in the past 24 hours. Toncoin spearheaded the winners, which surged 5.03% to US$2.41. The native token of the TON Network has jumped 46.96% in the past seven days.

Toncoin received a boost last week from a Thursday announcement that messaging app giant Telegram had partnered with TON to provide a self-custodial digital wallet — TON Space — that is available to the 800 million Telegram users.

“It’s heartwarming to see social platforms gear up to more crypto functionality and one can’t help but assume that X (formerly Twitter) will be doing something similar and then, if that happens, that most social media platforms will need to follow suit,” said d’Anethan.

Binance’s BNB was the only top 10 token logging a 24-hour loss, which dipped 0.12% to US$216.04 and was still trading 5.03% higher for the week. The world’s largest crypto exchange is facing mounting regulatory challenges in the U.S., with the chief executive officer of Binance U.S. leaving the firm last week.

The total crypto market capitalization gained 1.24% in the past 24 hours to US$1.07 trillion, while trading volume surged 76.96% to US$31.02 billion.

U.S. equities flat ahead of Fed interest rate decision

U.S. stock futures edged higher as of 09:00 a.m. in Hong Kong. Wall Street closed flat on Monday, with all three major U.S. indexes logging gains within 0.07%.

Most main stock indexes in Asia went lower on Tuesday morning. China’s Shanghai Composite, Hong Kong’s Hang Seng, Japan’s Nikkei 225 and South Korea’s Kospi all logged losses.

Investors are now waiting for the Federal Reserve’s Wednesday decision on interest rates, which are now between 5.25% and 5.50% — the highest level in the past 22 years.

The CME FedWatch Tool predicts a 99% chance the central bank will maintain the current rate unchanged in its meeting on Sept. 20. It gives a 71% chance for another pause in November, down from 73% on Monday.

“The meeting is consequently expected to have no impact on the (crypto) market, investors have already priced in with certainty that rates remain on hold,” said Greco at Fineqia International.

All eyes are now on the Fed Chair Jerome Powell’s remark that will accompany the interest rate decision on Wednesday, which could provide further insights into the central bank’s future monetary policies.

“We think the Fed will take a ‘hawkish pause’ this week and the futures market will reprice a higher probability for another rate hike before year end,” Megan Horneman, chief investment officer at Verdence Capital Advisors, told Bloomberg on Tuesday. “Unfortunately, inflation is very easy to reignite especially if energy prices begin to filter into broad prices. Therefore, we think the Fed will need to insinuate they may not be done raising rates.”

The global oil benchmark Brent crude futures traded right below US$95 on Tuesday morning, which gained over 30% in the past three months. The price surge was fueled by Saudi Arabia and Russia announcing earlier this month that they would extend a combined oil supply cut of 1.3 million barrels per day to the end of the year.

Meanwhile in China, at a Monday symposium attended by representatives from foreign companies including JPMorgan Chase & Co. and Tesla Inc., People’s Bank of China Governor Pan Gongsheng vowed to consider more measures to stabilize foreign investment and trade, according to Bloomberg on Monday. 

The move came amid tensions between Washington and Beijing, with some Chinese government agencies in September reportedly restricting their staff from bringing Apple iPhones to offices.

(Updates with equity section.)

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