The price of Bitcoin is under pressure, with the price of Bitcoin approaching $60,000. This week, the cryptocurrency market’s focus is on the Federal Reserve ahead of the upcoming FOMC meeting and expected comments from Chairman Powell – let’s dig deeper.
All hopes of Bitcoin’s one-way race to $100,000 have vanished. The price action is lackluster (at least for the bulls), with the Bitcoin price falling, sparking interesting sellers. BTC Bears are not relenting and are targeting Bitcoin price at $60,000 – outpacing the sell-off over the past five or so trading days.
(Bitcoin/Dollart)
Research FOMC and Powell: Will the Fed Save Bitcoin Price?
Events this week may take an interesting turn. TSLA’s bullish earnings call last week fueled a shift into risk sentiment, sparking demand for the world’s most valuable currency. Besides the upcoming Federal Open Market Committee meeting, all eyes in the market are on Jerome Powell, Chairman of the US Federal Reserve.
In early 2020, the Fed changed its monetary policy to fiscal stimulus, pumping prices throughout the market, with Bitcoin rising to $70,000 by November 2021.
But now, in the face of persistent CPI and geopolitical pressures in the Middle East, the cryptocurrency market is now tense as investors eagerly await the interest rate decision that the Federal Open Market Committee (FOMC) will issue on May 1.
If anything, the Fed’s decision on interest rates (especially if it decides to cut interest rates from 5.50%) will profoundly impact the price of Bitcoin and the broader cryptocurrency landscape – adding more fuel to the market’s risk sentiment.
This could boost Bitcoin ETF inflows – which have consistently outperformed bond ETFs so far in 2024.
Analysts’ expectations for the FOMC meeting vary, but the Bitcoin market widely expects the Federal Reserve to continue keeping interest rates steady. Regardless of the interest rate statement, volatility is expected after 45 minutes.
At this point, traders will be particularly interested in Jerome Powell’s press conference, which, as in the past, could provide important insights into the direction of the central bank’s monetary policy in the near term.
The Fed’s stance – as expressed by Powell’s tone – is crucial, especially after recent economic data.
Last week, data showed that real GDP grew by 1.6% in the first quarter of 2024, almost 50% slower than the 3.4% recorded in the first quarter of 2023.
It is worth noting that advanced GDP fell well below economists’ expectations of +2.5% – indicating a slowdown in US growth.
(Bureau of Economic Analysis)
This unexpected slowdown in GDP growth and rising inflation have raised concerns about delays in expected interest rate cuts by the Federal Reserve, negatively impacting cryptocurrency sentiment.
Inflation data in March showed that price pressures in the United States rose 2.7%, pushing annual headline inflation to 3.4%, well above the Fed’s ideal level of 2%.
At the same time, the labor market in the United States was strong, with more job opportunities than available workers.
Analysts now say that a combination of weak GDP growth and rising price pressures could see Powell keep interest rates higher for longer than expected, or even consider raising them to curb inflation.
What does this mean for the price of Bitcoin? Increased outflows from spot BTC ETF issuers
If the Federal Reserve decides to raise interest rates, as it did in 2022, Bitcoin prices will likely fall, even after the halving.
This situation is exacerbated by the recent increase in spot Bitcoin outflows, which indicates investor anxiety.
Lookonchain data on April 26 shows that GBTC and the other nine Bitcoin ETFs, including BlackRock and Fidelity, fell by more than 5,000 BTC worth more than $320 million.
If the outflows continue, the price of Bitcoin will likely collapse below $60,000, spooking the market and forcing it to dump altcoins – a potential golden opportunity.
Find out: The expert coin dealer who cashed in millions, doubling down on these two new gems
Disclaimer: Cryptocurrencies are a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all your capital.