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On Friday, the Bitcoin (BTC) price remained relatively stable in the mid-$29,000s. During an earlier session, the cryptocurrency experienced some support when it briefly dropped to the $29,000 level and tested the 21-Day Moving Average that was just above it.
Despite this temporary support, the Bitcoin bulls seem to be taking a pause before reaching the significant psychological threshold of $30,000, especially with key macro events, such as the rate decision from the US Federal Reserve that is looming next week.
Personal Consumption Expenditure (PCE) Price Index Impacts Bitcoin
The Personal Consumption Expenditure (PCE) price index, released by the Bureau of Economic Analysis, is a significant macro event for the Bitcoin market.
Investors were eagerly waiting for the release ahead of the Federal Open Market Committee (FOMC) meeting of the US Federal Reserve (Fed) on May 2-3. The PCE is considered the Fed’s preferred inflation measure as it measures prices paid by consumers for domestic purchases of goods and services and excludes food and energy.
Analysts predicted that the core PCE index would rise by +0.3% in March, resulting in an annualized increase of 4.5%, which is slightly lower than the previous month’s 4.6%. In February, the index was +0.3% on a monthly basis, which was lower than the expected forecast of +0.4%. It was believed that meeting expectations or any favorable surprises would have a bullish effect on the Bitcoin market.
Ted (@tedtalksmacro), a well-known analyst, expressed his opinion that “Bulls want to continue seeing it trend south!” and suggested that there was a good likelihood of a bullish surprise. Unfortunately, these expectations did not come to fruition.
As anticipated, the core PCE index remained at 0.3% on a monthly basis while on an annual basis, it dropped to 4.6%, meeting the predicted value. Consequently, the Bitcoin price reacted accordingly, holding steady at approximately $29,300 at the time of writing.
Higher Interest Rates Could Trigger Second Wave of Bank Failures in US; Good for Bitcoin?
After the release of the latest macro data, Fed Funds Futures traders are anticipating a 25 basis points (bps) rate hike next Wednesday with a probability of over 80%. According to the CME FedWatch Tool, the probability was at 88% before the PCE was released and remained at the same level after its release.
It appears that the market is not convinced by Powell’s stance. Liz Young, the Head of Investment Strategy at SoFi, shared a chart indicating that the market is now pricing in an 88% probability of a rate hike next week, which is an increase from earlier in the month.
While some traders are also betting on a hike in June, it’s not as certain. Despite this, the markets still believe that we will see multiple cuts later in 2023 and early 2024.
It remains to be seen what the Fed will make of this data, and whether progress in fighting inflation will be enough for Fed Chairman Jerome Powell.
In a phone prank with a fake Ukraine President Volodymyr Zelenskyy, Powell acknowledged that there are at least two more rate hikes coming, followed by a long period of high-interest rates with significant negative effects on the US economy and the US labor market.
Powell also stated that a recession in the United States is likely and that there is no painless way for inflation to come down.
It’s expected that if interest rates go up, more regional banks in the US could struggle to stay afloat, which could result in a second wave of bank failures. This situation could be good for Bitcoin, as it could benefit from the fact that the Fed may not be able to increase rates as much as they would like to. Currently, Bitcoin is trading at $29,378.
Will May Bring A New Upswing for Bitcoin?
Bitcoin’s price is hovering above $29,000 but struggling to sustain momentum in lower timeframes. Following a recent rejection at $30,000, the price fell to around $27,300 before approaching crucial resistance levels again. It remains to be seen whether the rally will maintain its strength or face another rejection, leaving the market in a state of uncertainty.
The recent fluctuations in Bitcoin’s price may have caused some concern among investors, but market sentiment has remained positive. Many traders believe that a BTC price rally is imminent and have held onto their tokens rather than panic selling.
Data from Glassnode suggests that holder accumulation has been strong for several months and there are no indications of any significant sell-offs. This sustained accumulation provides a solid foundation for Bitcoin’s current rally, and may continue to support its upward trajectory in the coming days.
Analysts have noted that bull runs tend to begin every 1430 days, and the recent rebound may have ignited an upward trajectory. The upswing is typically triggered when the RSI (Relative Strength Index) is between 49.5 and 50.
For the current upswing to continue and reach new highs above $31,000, the bulls will need to maintain their strength and surpass the $30,000 resistance level. If successful, the price will be headed for an upswing through the next month and could potentially expand to $50,000 by the end of 2023.
Meanwhile, those wanting to escape the current volatile conditions should consider investing in crypto presales. These have big upsides and offer gains before the listing begins.
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