Bitcoin drops 1.8% on Thursday following a hawkish a FOMC meeting
Experiences a strong technical rejection at the 50-day SMA on the daily chart
Cryptos expected to extend their rangebound pattern in the absence of any major catalyst
Fed inflicts severe damage to risky assets
Cryptocurrencies started the week on the front foot, with Bitcoin reclaiming the $27,000 mark for the first time since August 31. Nevertheless, the positivity got shattered after the FOMC rate decision on Wednesday. Even though the Fed decided to keep interest rates steady, policymakers opted for another 25 basis points hike later in the year and pencilled in fewer rate cuts in 2024 through the updated dot plot.
The Fed’s statements were a little more hawkish than what the markets had been expecting. As a result, the policy sensitive two-year yield rose to its highest level since 2006, while the closely followed 10-year yield leaped to a fresh cycle high. Generally, when yields move higher, risky assets such as cryptocurrencies become less attractive than bonds from a risk-return perspective.
Besides increasing investor interest towards bonds, higher interest rates could also act as a major tailwind for the US dollar. This is a double-edged sword for the cryptocurrency sphere as on the one hand, the greenback is inversely related to the price of digital coins. On the other hand, more renowned cryptos such as Bitcoin and Ethereum could attract inflows from investors who want to protect themselves against a constant devaluation of their domestic currency.
Cryptos could enter a silent era
Cryptocurrencies are likely to enter a consolidation phase as they seem to be lacking significant catalysts that could really trigger some volatility. For instance, the macroeconomic landscape is expected to remain rocky for quite some time as the Fed restated once again its commitment to the higher for longer regime. Moreover, the Securities and Exchange Commission (SEC) has been constantly delaying the approval of the much-anticipated spot-Bitcoin ETFs, depriving the crypto space from the sole recent bullish catalyst.
Sticking to idiosyncratic factors, Bitcoin halving, which essentially reduces the supply of Bitcoin in half every four years, is scheduled to occur in April 2024. Traders are eager to see how it will impact the supply and demand dynamics within the crypto space as the previous one took place during a period of extremely loose monetary and fiscal conditions.
Last but not least, the upcoming months will probably be a good test for the resiliency of many crypto-related companies that have managed to stay afloat. The combination of restrictive monetary policy and increasing regulatory crackdown could lead to more blowouts in the sector, which will in turn negatively impact the prices of digital assets.
Bitcoin slides after 50-day SMA rejects advance
From a technical standpoint, BTCUSD has been losing ground in the last couple of sessions after the bulls’ attempts to claim the 50-day simple moving average (SMA) were repeatedly repelled. However, the king of cryptos remained comfortably above the 26,000 mark, suggesting limited selling interest.
To the downside, the price might challenge the May low of $25,785 ahead of the June bottom of $24,750.
Alternatively, bullish actions could propel Bitcoin towards the recent rejection region of $27,490 before the August resistance of $28,140 comes under examination.
Bitcoin drops 1.8% on Thursday following a hawkish a FOMC meeting
Experiences a strong technical rejection at the 50-day SMA on the daily chart
Cryptos expected to extend their rangebound pattern in the absence of any major catalyst
Fed inflicts severe damage to risky assets
Cryptocurrencies started the week on the front foot, with Bitcoin reclaiming the $27,000 mark for the first time since August 31. Nevertheless, the positivity got shattered after the FOMC rate decision on Wednesday. Even though the Fed decided to keep interest rates steady, policymakers opted for another 25 basis points hike later in the year and pencilled in fewer rate cuts in 2024 through the updated dot plot.
The Fed’s statements were a little more hawkish than what the markets had been expecting. As a result, the policy sensitive two-year yield rose to its highest level since 2006, while the closely followed 10-year yield leaped to a fresh cycle high. Generally, when yields move higher, risky assets such as cryptocurrencies become less attractive than bonds from a risk-return perspective.
Besides increasing investor interest towards bonds, higher interest rates could also act as a major tailwind for the US dollar. This is a double-edged sword for the cryptocurrency sphere as on the one hand, the greenback is inversely related to the price of digital coins. On the other hand, more renowned cryptos such as Bitcoin and Ethereum could attract inflows from investors who want to protect themselves against a constant devaluation of their domestic currency.
Cryptos could enter a silent era
Cryptocurrencies are likely to enter a consolidation phase as they seem to be lacking significant catalysts that could really trigger some volatility. For instance, the macroeconomic landscape is expected to remain rocky for quite some time as the Fed restated once again its commitment to the higher for longer regime. Moreover, the Securities and Exchange Commission (SEC) has been constantly delaying the approval of the much-anticipated spot-Bitcoin ETFs, depriving the crypto space from the sole recent bullish catalyst.
Sticking to idiosyncratic factors, Bitcoin halving, which essentially reduces the supply of Bitcoin in half every four years, is scheduled to occur in April 2024. Traders are eager to see how it will impact the supply and demand dynamics within the crypto space as the previous one took place during a period of extremely loose monetary and fiscal conditions.
Last but not least, the upcoming months will probably be a good test for the resiliency of many crypto-related companies that have managed to stay afloat. The combination of restrictive monetary policy and increasing regulatory crackdown could lead to more blowouts in the sector, which will in turn negatively impact the prices of digital assets.
Bitcoin slides after 50-day SMA rejects advance
From a technical standpoint, BTCUSD has been losing ground in the last couple of sessions after the bulls’ attempts to claim the 50-day simple moving average (SMA) were repeatedly repelled. However, the king of cryptos remained comfortably above the 26,000 mark, suggesting limited selling interest.
To the downside, the price might challenge the May low of $25,785 ahead of the June bottom of $24,750.
Alternatively, bullish actions could propel Bitcoin towards the recent rejection region of $27,490 before the August resistance of $28,140 comes under examination.
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