Bitcoin Price Touches $28,900 - $30,000 May Be Just A Few Days Away

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On Wednesday, the price of Bitcoin spiked ahead of the Fed’s monetary policy decision. Traders were closely monitoring the event, expecting it to push the price of Bitcoin in the short term.

Bitcoin Climbs To A Nine Month High of $28,900

Bitcoin’s price has risen slightly over the past couple of hours, reaching $27,700, after falling from its peak for the week of $28,900, the highest it has been since last June. The digital token had a rocky start to March, falling below $20,000. But the token has since begun its rally and is up from around $16,500 at the beginning of the year, leading to speculation that a new bull market is beginning.

Investors are anticipating the token to reach the $30,000 level, considering it to be critical as this was the price level where Bitcoin stood before a crash last summer. Last year, the crash was triggered by the collapse of a lot of crypto companies, and a rise above $30,000 would indicate that the bear market for Bitcoin is over.

Although there are numerous reasons for Bitcoin’s recent rally, including the recent banking panic that supports the narrative of decentralized finance, the most logical explanation is related to the Federal Reserve’s monetary policy.

The failure of multiple banks in the US in recent weeks has been linked to losses on bond portfolios, which is an unintended consequence of the Fed’s significant increase in interest rates over the past year to combat decades-high inflation. Elevated rates have also hurt crypto prices, as riskier investments like Bitcoin are more sensitive to higher returns on government debt that are considered risk-free.

Traders were anticipating that the Fed would continue to raise rates, but pressure on banks has resulted in an abrupt change in expectations, with most investors predicting the central bank to be more accommodating on monetary policy. Now that the Fed has increased rates by only a quarter of a percentage point, in line with February’s increase, which was itself a significant decrease from the much larger rate hikes in the previous year. Bitcoin could see positive momentum in the coming days.

Investors React To Fed’s 25 Basis Points Hike

Federal Reserve Chair Jerome Powell has announced that the Fed will continue to reduce its balance sheet and will closely monitor incoming data to assess the effects of tighter credit conditions.

Speaking at a press conference following a 25 basis points hike, Powell expressed concern about the recent banking event in the US, which saw the closure of Silicon Valley Bank, Signature Bank and Silvergate Bank, and said that this will lead to tighter credit conditions.

The Fed’s policy statement on interest rate hikes noted that the US banking system is sound and resilient, but Powell indicated that the bank closures may require stronger regulation. Powell also noted that the inflation rate remains above the Fed’s goal of 2% and that the process of getting it down will be bumpy.

He added that long-term inflation expectations remain anchored and that decisions going forward will be made on a meeting-by-meeting basis. The Fed Chair also stated that a significant number of people at the Federal Open Market Committee (FOMC) meeting anticipated tightening credit conditions, which could mean that monetary tightening has less work to do.

The crypto market has been digesting the Fed’s decision over the past few days, with Bitcoin experiencing a significant rally. However, following Powell’s remarks, the cryptocurrency declined by over 4% to trade at $27,500, after initially spiking to $28,870.

Going forward, there may be some volatility, but the crypto asset is expected to maintain its presence above the $27,000 mark to avert panic in the market.

The Fed’s decision to continue to reduce its balance sheet and closely monitor incoming data could have a significant impact on the US economy and global markets. The closure of several banks may also lead to tighter credit conditions, which could have ripple effects across multiple industries.

However, Powell’s reassurance that long-term inflation expectations remain anchored may help to calm any concerns about the Fed’s policy decisions. The crypto market will likely continue to react to these developments, and investors will need to stay updated to make informed decisions.

Will Bitcoin Cross $30,000 by The Weekend?

The price of Bitcoin, along with the Dow Jones Industrial Average and S&P 500, will catch momentum as investors digest the Fed’s decision to hike interest rates. In the short term, the cryptocurrency is expected to be bullish, and so has the market.

Cryptocurrency markets are indicating greed as suggested by the Crypto Fear and Greed Index, which rose as high as 68 on Tuesday, with investors awaiting the decision from FOMC. The last time this level was observed was five months back in November.

In addition to this, traders have been getting aggressive in the crypto derivatives market and the volume of Bitcoin options is the highest since October 2021. Dessislava Aubert, an analyst from Kaiko, has said that a lot of positions have been called last week and this might drive the price of Bitcoin further.

Edward Moya, an analyst from Oanda, raised a neutral view suggesting “A lot needs to go right for this risk-on rally to continue … a lot of traders are eyeing the $30,000 level for Bitcoin and depending on how price reacts there, momentum flows could support a 5% move in either direction, If the Fed doesn’t spark a rally, Bitcoin could settle closer to the $25,000 region.”

Before the FOMC meeting, Bitcoin rose to a nine-month high at $28,900, in the late session on Wednesday. And now that the results are out, a large number of traders seem to have taken a profit. Many have done this out of the “sell the fact” reaction to the meeting.

Bitcoin dip buyers may have been attracted by renewed US bank stability concerns on Wednesday, despite the correlation between US equity markets and cryptocurrency having significantly weakened in recent times. This could be due to the drop in bank stocks, caused by comments from US Treasury Secretary Janet Yellen, which could potentially lead to fears amongst bank customers about the safety of their deposits.

Naturally, investors have turned to Bitcoin with the rise in fear regarding bank stability. With the collapse of banks in the US, investors have found Bitcoin to be a safe haven for their investments.

Any downside in the traditional equity markets or an exaggeration of the US bank crisis in the coming days will have a positive effect on the price of Bitcoin. Bitcoin could very likely reach the $30,000 level and even surpass the next resistance at $32,500. With that being said, investors should do their own research before investing in any cryptocurrency.

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