Bitcoin Hits New 6-Month Highs after the Fed’s Feeble Pushback
BTC/USD Analysis
The popular cryptocurrency was off to a strong start to the new year, after the collapse of 2022, helped partly by optimism of a less aggressive Fed which is detrimental to the USDollar. The central bank moderated the pace of tightening in December and downshifted again on Wednesday, with a small 0.25% rate increase. [1]
Markets price in one more such move, before the central bank cuts rates later in the year. The Fed is more hawkish as its latest Summary of Economic Projections (SEP) suggests two more such hikes and a median terminal rate of 5.1% [2]. Even though Chair Powell reiterated this view and retained its hawkish stance, resistance against these expectations was not forceful, as he did not validate the SEP and did not explicitly rule-out looser policy.
BTC/USD took the opportunity to move into profits now eyeing the August highs (25,231). Taking that out could open the door to 27,988-28,097, but we are still cautious about such prospects.
On the other hand, the cryptocurrency is a bit tame today and a pullback may be required for further advance. As such, we can see downward pressure, but a strong catalyst would be required for a test of the key 20,300-20,000 region.
Caution is needed ahead, since the economic calendar includes more releases ahead, including the US employment report on Friday.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 01 Feb 2023 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20230201.htm | |
| Retrieved 31 Mar 2023 https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20221214.pdf |
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