What's Next for Bitcoin Price as Fed Keeps Interest Rates Unchanged?
Can Bitcoin Soar Amid Fed's Hawkish Tone?
Federal Reserve chair Jerome Powell speaking following the Fed's two-day policy meeting on June 12.Source: CNBC Television
The Federal Reserve announced on Wednesday that it would keep its key interest rate unchanged at 5.25% despite a recent rise in inflation. This decision surprised the market, which had anticipated more significant rate cuts.
Market Expectations vs. Fed's Forecast
Initially, the Fed had forecast three rate cuts for this year. However, it has now reduced this to just one cut. Although recent data indicates that inflation is cooling, it remains above the Fed's 2% target. This has led to a "hawkish tone" from the Federal Reserve, which some analysts believe will impact market dynamics.
Bitcoin Predictions Amid Federal Reserve's Decisions
Despite the Fed's "hawkish tone," some analysts remain optimistic about Bitcoin's prospects. Pseudonymous technical analyst CryptoCon predicts a significant surge for Bitcoin, projecting it to rise nearly 25% above its all-time high of $73,679. CryptoCon's forecast suggests Bitcoin could reach $91,539 before eventually climbing to a cycle peak of $123,832.
In a June 12 post on X (formerly Twitter), CryptoCon reiterated the unchanged target for Bitcoin, just hours after the Fed released its meeting minutes.
The analyst uses the “Magic Bands” model, which analyzes previous cycle peaks and bottoms to forecast future prices. According to this model, Bitcoin is currently consolidating within level 2.5. Once it breaks through this period, it is expected to reach level 3 at $91,539, followed by the "Cycle Top Target" of $123,832.
Impact of Interest Rates on Bitcoin
Interest rates play a significant role in investor behavior. When rates are low, traditional lower-risk assets like bonds become less attractive, prompting investors to consider riskier assets such as Bitcoin. Conversely, higher interest rates tend to make these safer assets more appealing.
Market Reactions and Projections
Michaël van de Poppe, founder of MN Trading Consultancy, shared his perspective on the situation. In a June 12 post on X, van de Poppe noted that the Federal Open Market Committee's (FOMC) hawkish stance was not favorable for Bitcoin.
He highlighted that Federal Reserve Chair Jerome Powell's speech and projections significantly influence Bitcoin's market performance.
While the Federal Reserve’s decision to maintain interest rates at 5.25% was unexpected, it has not dampened the optimism among Bitcoin analysts. The interplay between interest rates and market behavior continues to shape the financial landscape, with analysts closely watching for future developments.
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