Bitcoin rallied briefly before the Federal Reserve announced its latest decision on interest rates. It rose above $38,000, the highest level since January 21. This shows that the cryptocurrency is gradually recovering from the dip seen on Monday, when it fell to $33,000.

It also appears that the correlation between cryptocurrencies and stocks are stronger than ever because in recent weeks, investors sold high-priced tech stocks and digital tokens in response to potential tighter policy by the Fed. Bitcoin's move in tandem with the Nasdaq 100 and S&P 500 also hit an all-time high this month, bolstering confidence that one of the world's most volatile underlying assets could become more predictable going forward.

Other cryptocurrencies also showed gains on Wednesday, with Ethereum rising 10%, which is relatively higher than Bitcoin's 5% growth. Copper.co head Fadi Abualfa said: "Markets may have already priced in rate hikes. With the latest market sell-off, I would expect that the Fed softens its tone as to stem any further panic.Bitcoin will follow the general market sentiment at this point. "

The Fed ended its two-day meeting yesterday, where the committee decided to keep rates and tapering unchanged, all while announcing a rate hike in March.

"The overall sentiment in crypto is let's try and settle in a range and do short term trading or find dislocations," said Todd Morakis, co-founder of JST Capital. "There are some bargain hunters here, but most of the people have been waiting for a time to invest in crypto and will continue to buy quality coins as the market moves down," he added.