Bitcoin Price Climbs At $27,200 - Will The FOMC Minutes Today Drive BTC To New Heights?

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Bitcoin (BTC) price has shown equal participation between the bulls and bears since early in the month. This is evident given that there have been no significant price movements, and BTC has consolidated within a rather tight zone.

#BTC INTRADAY UPDATE
VOLATILITY : HIGH
EXPECTED SCENARIO:
Today is the FOMC discussion day. Market will be volatile around 6 PM UTC/ 11.30PM IST. BTC is still trading in the reance. May go in either direction after tonight.
Today $BTC is bearish and may continue downside.
See📎 pic.twitter.com/3UWK8MFc6S

— Swap K. (@swap_crypto) May 24, 2023

Among the factors contributing to the rather boring price action displayed by Bitcoin price and the crypto market in general are the macroeconomic events in the United States. Macroeconomics such as inflation, Consumer Price Index (CPI), Gross Domestic Product (GDP), interest rates, debt, unemployment, and retail sales, among others, have an impact on the crypto market because they control the strength of the U.S. dollar (USD). It is worth mentioning that Bitcoin trades inversely with the USD, which means any news that renders the greenback weak benefits Bitcoin and vice versa.

Role Of U.S. Macroeconomics On Bitcoin Price And Crypto In General

By controlling for several possible biases, the Federal Reserve (Fed) determines whether each of the listed macroeconomics, among others, has a significant impact on Bitcoin or crypto returns. An increase in positive news on unemployment rates and durable goods would normally result in an associated increase in equity returns. However, the opposite would be true for BTC’s case, as increases in positive news after unemployment and durable goods announcements cause a drop in Bitcoin returns.

On the flipside, an increase in the number of negative reports on the two readings would cause Bitcoin price to rise. Reports have also shown that as a developing market, cryptocurrency continues to mature via interactions with macroeconomic news.

The Federal Open Market Committee (FOMC) is the monetary policymaking body of the Federal Reserve System. Chaired by the controversial Jerome Powell, the FOMC “schedules eight meetings per year, one about every six weeks or so,” according to the official website.

The Committee must also hold unscheduled meetings to review economic and financial developments whenever necessary. Afterward, they issue a policy statement summarizing the economic outlook and the policy decision at that meeting.

Bitcoin Price In Relation To US FOMC

The Fed will release minutes of the FOMC’s May 2 – 3 policy meeting today, May 24, at 18:00 GMT, providing valuable insights into the Fed’s monetary policy outlook. They will also communicate about the potential for further rate hikes. As has been the norm, market players will monitor the minutes closely for any hints on the Fed’s stance on inflation, economic growth, and interest rates, which often affect financial markets.

During the May meeting, the FOMC raised the federal funds rate by 25bps to the range of 5.00 – 5.25%, as markets anticipated. Eliminating ‘anticipates additional policy tightening’ in the previous reading hinted at a potential pause at the next June 13-14 meeting. Given the latest round of economic data, however, the odds of a rate hike are higher, but only a small hike. Nevertheless, the market reaction could be limited if today’s minutes confirm a pause. Notwithstanding, comments about rate cuts by year-end are not expected, although their presence could provoke a buying spree in BTC.

The focus is on the agency’s view of the current rate relative to the peak and whether, along with the tightening in credit standards resulting from the banking crisis, the rate is restrictive enough to bring inflation back to 2%.

Most Wall Street analysts say the rate hike in May was the last of this cycle. Market participants share this sentiment and have increased bets on several interest rate cuts beginning in Q3.

Key Insights To Look Out For In Today’s FOMC Meeting

The danger posed by regional banks, credit tightening, legislature perspectives on debt limit crisis, and the overall economic outlook.

Experts assign a 75% chance of the Fed keeping rates unchanged in June but factor in about 160 bps of interest rate cuts until November 2024, according to the CME Group FedWatch tool.
A cohort of Fed speakers has sounded slightly more hawkish of late than anticipated, but Fed Chair Jerome Powell has signaled that tighter banking credit could limit the need to increase rates further.

Expert advice is that traders make use of stop loss as a risk management strategy to avoid massive losses in case of increased market volatility.

Bitcoin Price Prediction With $26,500 In Sight

At the time of writing, Bitcoin price is $26,816, a daily drop of 2%, indicating Fear, Uncertainty, and Doubt (FUD) ahead of the FOMC announcement. Bitcoin price is confronting selling pressure prevented by the 50-day Exponential Moving Average (EMA) at $27,495. This is probably a cohort of traders looking to sell as they anticipate a negative reading from the Fed.

Nevertheless, based on the general outlook, Bitcoin price is pulling towards bullishness, although the momentum remains weak. The Parabolic SAR indicator evidences this after it flipped below BTC. Whenever this trend-following indicator tracks the price from below, it is interpreted as a bullish sign.

Accordingly, an increase in buyer momentum could see Bitcoin price shatter above the 50-day EMA, paving the way for further gains. In such a case, BTC could tag the $28,556 resistance level next or make an extension to the April 14 high of around $30,728 in a highly bullish case. Such a move would constitute a 15% climb from the current price.

To support this thesis, the Awesome Oscillators were soaked in green and steadily pulling toward the midline, a sign that bulls were gaining ground and could take over soon. Similarly, BTC had strong support downward provided by buying pressure from the 100-day and 200-day EMA at $26,382 and $24,968, respectively.

BTC price FOMC — TradingView Chart: BTC/USDT 1-Day Chart

Conversely, if panic sellers pull the trigger, Bitcoin price could drop. The Relative Strength Index (RSI) has already hinted at the possibility of such an outcome. The RSI has tipped downward and is about to signal a call to sell BTC. This would be confirmed once the RSI crosses below the signal line (yellow band). Traders heeding this call will send Bitcoin price lower, potentially toward the psychological $24 000.

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