How Will the Fed's Interest Rate Decisions Impact Bitcoin Prices?
Bitcoin Poised for a Bullish Rebound or Further Decline?
Bitcoin is currently trading near $67,379 as investors brace for major economic updates from the United States. The forthcoming release of the Core Consumer Price Index (CPI) month-on-month data is highly anticipated, with expectations of steady or slightly increasing inflation. These figures are critical as they influence the Federal Reserve’s monetary policy decisions, which could impact investment flows into riskier assets such as cryptocurrencies.
Federal Reserve's Role
Alongside the CPI data, the Federal Reserve is set to announce its Federal Funds Rate, which is widely expected to remain unchanged. Any hints of potential rate hikes could bolster the US dollar, exerting downward pressure on Bitcoin prices.
Market Predictions and Expectations
According to The Kobeissi Letter, posted on the X platform, every major bank predicts the CPI inflation to come in at 3.4%. Current prediction markets indicate a 17% chance of inflation exceeding 3.4%, a scenario that would mark an inflation increase for three of the last four months. Conversely, there is a 41% chance of inflation coming in below 3.4%.
Bitcoin Price Analysis
Bitcoin's recent price movements suggest a bearish trend as it has broken through an upward trendline and experienced a significant decline. Despite this, a green pivot point has provided support, potentially triggering a bullish rebound. Key resistance levels to monitor are $69,174, $71,041, and $73,000, while support levels are found at $64,601, $63,456, and $62,179. Technical indicators such as the Relative Strength Index (RSI) and Exponential Moving Average (EMA) offer insights into Bitcoin's momentum, with a buy position recommended above $65,985, targeting $69,174.
Impact of US Economic Data
The outcomes of US economic events, including the CPI data, Federal Reserve rate announcement, and Federal Open Market Committee (FOMC) projections, will significantly influence Bitcoin prices. Inflation trends and interest rate decisions play a crucial role in shaping investor sentiment and directing fund flows into various asset classes.
Higher-than-expected inflation or signals of rate hikes could strengthen the US dollar and lead to a bearish outlook for Bitcoin. Conversely, lower inflation or a dovish stance by the Fed could benefit cryptocurrencies as investors seek higher returns in a low-interest-rate environment.
Monitoring Bitcoin's Momentum
Investors and traders are keenly observing the technical indicators and key price levels for Bitcoin to assess its momentum and potential price movements. Although the current market conditions suggest a bearish trend, the presence of support levels and bullish patterns could lead to a reversal.
In summary, the interplay of US economic data and Federal Reserve policies will be pivotal in determining Bitcoin's trajectory in the near term.
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