The US Federal Reserve’s Federal Open Market Committee (FOMC) will announce its interest rate decision next week amid inflation concerns and the banking crisis. Can Bitcoin price show a different trend before the interest rate decision? Let’s answer…
Could Bitcoin price correct before the important FOMC decision?
The banking crisis following the bankruptcy of the SVB caused the market to price lower interest rates much earlier than previously anticipated. Now at the main breaking point, the FOMC will meet next week from March 21-22, 2023.
While the market’s expectation has changed with the dynamics of the banking crisis, a 25bps rate hike could well be bullish for the crypto ecosystem, as it goes against the Fed Chairman’s latest comment on accelerating rate hikes. cryptocoin.comBitcoin price rose sharply after the positive US CPI data announced on March 14.
Analysts also predict that the Fed may choose to pause the rate hike this time, but the target probability may change ahead of the meeting. Currently, the CME FedWatch Tool, which measures the probability of the Fed’s target rate, shows that there is a 38% probability that rates will hold steady at the next meeting, or a 63% probability that they will increase by 25 basis points. With the macro environment and the rising dynamics in the banking sector, Bitcoin price may see sideways movement or a minor correction before the meeting.
Could it be a bullish signal for BTC?
In his recent analysis, CryptoQuant analyst Cristian Palusi suggested that the liquidity crises currently plaguing commercial banks could be a “long-awaited buy signal” for Bitcoin.
In a post published on Thursday, Palusci noted that implied federal funds’ policy rates severely shortened the timeframe when they think the central bank will cut interest rates for the first time, from the first quarter of 2024 to June 2023.
“One of the elements that represented a clear buy signal emerged just after the bankruptcy of Silicon Valley Bank and the associated bailout: the Coinbase rally,” Palusci wrote. Coinbase’s stock COIN has risen over 37% in the past 5 days and is known to be tightly correlated with the cryptocurrency market it enables trading.
Bitcoin price may show a different trend in the next 10 days
The leading crypto made a surprise move above $27,000 amid the current banking crisis. The wave of collapse has greatly benefited the crypto space when First Republic Bank’s latest report on the problems it is facing pushed the BTC price above critical levels.
The market is currently at a stage where there is a certain mismatch between the news background and price movements. BTC price is exhibiting a huge price action that may sooner or later face a major correction. The price still has the potential to break above 28,500 and hit the $30,000 target.
As seen in the chart above, the price is forming a wave pattern that indicates the future of the crypto market in the coming days. Bitcoin (BTC) price is expected to drop to the $21,000-21,500 region, where a large base of traders are expected to buy heavily. Such a move could trigger a strong rebound that could push price levels higher by $30,000 in the next few weeks.