As Bitcoin looked to be completely running out of puff after a 44% pump since the first of January, many investors may have been taking profits in BTC, as well as in a lot of the altcoins. However, with the Federal FOMC meeting being held on Wednesday, it might not be all over yet.
Just a bear market rally?
Ever since the start of the year the crypto market has seen a very welcome change in fortunes. Bitcoin led the way and some of the more highly regarded altcoins followed suit.
As the rally continued higher many analysts were calling it a bear market rally and a lot of speculators were on the sidelines waiting for what they saw as the inevitable pull-back.
This appeared to be what was going to happen as Bitcoin almost tagged $24,000 on Saturday before going into a bit of a tailspin and plunging as much as 6% on Sunday.
Price rallies into Wednesday’s FOMC meeting
However, on Monday, instead of the market continuing down, price has rallied somewhat and going into tomorrow’s FOMC meeting where the Fed’s Jerome Powell will potentially confirm the widely expected 0.25% interest rate rise, it is not really known how markets generally are going to react.
Given the nigh on 100% market expectation that the raise will be in the order of 25 basis points, and also taking into account that the Fed is expected to pause for perhaps an extended amount of time this year and not add any more raises, it might be expected that markets react favourably.
Fed Chair Powell’s hawkish jawboning expected
Of course, the Fed isn’t going to want markets going on a tear and therefore it is likely that Chairman Jerome Powell will use his speech, followed by the question and answer time to deliver as hawkish a message as possible.
It is to be wondered though whether this time the market will whimper and return to its kennel with tail firmly between its legs, or whether it will sense a touch of weakness in the Fed’s actions and start to act in the knowledge that the Fed pivot is coming sooner or later.
Strong price structure is needed
Bitcoin has returned into the upwards channel it has been following since mid-month. The very important resistance of $24,300 isn’t so far away, and a hold above $25,000 could see the door open to $30,000.
Of course, if Bitcoin makes such a move without first returning to confirm some of the lows, the insufficient price structure would likely not allow it to hold at $30,000 and a much deeper correction might be expected to eventually follow.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
