This was another volatile week for Bitcoin and most major altcoinsas the US banking sector came under renewed stress, while investors digested the Fed’s latest interest rate decision. Even though cryptos initially lost some ground after First Republic Bank’s collapse, they quickly recouped their losses and added more gains on the back of some dovish commentary in the latest FOMC meeting. Will cryptos manage to storm to fresh highs?
Fed aftermath
Βitcoin has been rising after the latest US monetary decision on Wednesday in which the Fed proceeded with a much-anticipated 25 basis points hike and signalled that this could be the final interest rate hike in this tightening cycle. However, Fed policymakers left the door open by stating that the future decisions will be data dependent, providing a mixed outlook for crypto investors.
It is common knowledge that the dramatic rise in interest rates inflicted severe damage on risky assets and especially cryptocurrencies, thus any signs that tilt towards a more accommodative Fed will be welcomed by cryptocurrency bulls. Considering that a Fed pause is currently the base case scenario for markets, digital assets are likely to gain on any event that will trigger speculation about faster rate cuts. Keeping that in mind, the crypto market is likely to experience heightened volatility in the days surrounding major data releases such as NFP or inflation reports.
Banking turmoil
Bitcoin and the broader crypto space are gaining as banking sector jitters continue to ripple across markets. Following the collapse of First Republic Bank last weekend, the focus now shifts to PacWest Bancorp, whose shares have been heavily beaten down in the past few days. Undoubtedly, the occurrence of another systemic event is likely to erode even more the confidence in fiat currencies, allowing cryptos to capitalise on their decentralised nature.
Generally, banks are likely to continue to struggle moving forward in 2023 as yield curves remain deeply inverted. The question that lies ahead is whether the Fed will be forced to cut rates sooner to prevent further fallout, with such a scenario being bullish for cryptos.
Regulatory concerns
Cryptocurrencies have been trading within a tight range for the past month despite improving macroeconomic conditions. Many traders attribute this consolidation to the ongoing regulatory assault by US policymakers, who have mainly targeted leading crypto exchanges such as Coinbase and Binance. In the latest episode, the US Securities and Exchange Commission (SEC) did not include a definition of digital assets in its 2023 hedge fund ruling, reversing its initial decision and depriving markets from a positive step towards clearer regulations within the crypto space.
Technical levels to watch
BTCUSD (Bitcoin) has been in a steady recovery after jumping back above its 50-day simple moving average (SMA). However, should this latest rebound fail to strengthen, the price would be on track to extend its structure of lower highs, which is a bearish technical signal.
If the rebound extends above the crucial $30,000 psychological mark, the 10-month peak of $31,064 could act as the first barrier for the bulls to clear. Even higher, the price could challenge $31,852, which is the 50.0% Fibonacci retracement of the 48,226-15,479 downtrend.
Alternatively, another round of weakness could bring the 38.2% Fibo of $27,988 under examination. A break beneath that zone could set the stage for the April low of $26,945.
This was another volatile week for Bitcoin and most major altcoins as the US banking sector came under renewed stress, while investors digested the Fed’s latest interest rate decision. Even though cryptos initially lost some ground after First Republic Bank’s collapse, they quickly recouped their losses and added more gains on the back of some dovish commentary in the latest FOMC meeting. Will cryptos manage to storm to fresh highs?
Fed aftermath
Βitcoin has been rising after the latest US monetary decision on Wednesday in which the Fed proceeded with a much-anticipated 25 basis points hike and signalled that this could be the final interest rate hike in this tightening cycle. However, Fed policymakers left the door open by stating that the future decisions will be data dependent, providing a mixed outlook for crypto investors.
It is common knowledge that the dramatic rise in interest rates inflicted severe damage on risky assets and especially cryptocurrencies, thus any signs that tilt towards a more accommodative Fed will be welcomed by cryptocurrency bulls. Considering that a Fed pause is currently the base case scenario for markets, digital assets are likely to gain on any event that will trigger speculation about faster rate cuts. Keeping that in mind, the crypto market is likely to experience heightened volatility in the days surrounding major data releases such as NFP or inflation reports.
Banking turmoil
Bitcoin and the broader crypto space are gaining as banking sector jitters continue to ripple across markets. Following the collapse of First Republic Bank last weekend, the focus now shifts to PacWest Bancorp, whose shares have been heavily beaten down in the past few days. Undoubtedly, the occurrence of another systemic event is likely to erode even more the confidence in fiat currencies, allowing cryptos to capitalise on their decentralised nature.
Generally, banks are likely to continue to struggle moving forward in 2023 as yield curves remain deeply inverted. The question that lies ahead is whether the Fed will be forced to cut rates sooner to prevent further fallout, with such a scenario being bullish for cryptos.
Regulatory concerns
Cryptocurrencies have been trading within a tight range for the past month despite improving macroeconomic conditions. Many traders attribute this consolidation to the ongoing regulatory assault by US policymakers, who have mainly targeted leading crypto exchanges such as Coinbase and Binance. In the latest episode, the US Securities and Exchange Commission (SEC) did not include a definition of digital assets in its 2023 hedge fund ruling, reversing its initial decision and depriving markets from a positive step towards clearer regulations within the crypto space.
Technical levels to watch
BTCUSD (Bitcoin) has been in a steady recovery after jumping back above its 50-day simple moving average (SMA). However, should this latest rebound fail to strengthen, the price would be on track to extend its structure of lower highs, which is a bearish technical signal.
If the rebound extends above the crucial $30,000 psychological mark, the 10-month peak of $31,064 could act as the first barrier for the bulls to clear. Even higher, the price could challenge $31,852, which is the 50.0% Fibonacci retracement of the 48,226-15,479 downtrend.
Alternatively, another round of weakness could bring the 38.2% Fibo of $27,988 under examination. A break beneath that zone could set the stage for the April low of $26,945.
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