Investors Speculate What Bitcoin Might Do If Fed Continues Rate Hikes

May 3, 2023 3:32 pm Comments

Since the start of 2023, Bitcoin and the rest of the crypto markets have made quite a significant recovery with BTC even reaching the $30k milestone.

With that being said, many investors and speculators believe that the price of BTC will continue to rise of the Federal Reserve decides to continue with its rate hikes.

There have many concerns with the continue rate hikes and some believe that this will cause a continuation of the banking crisis that has occurred over the past couple of months.

But pausing the agenda is also risky as it may allow inflation to go back up again which puts the Fed in a tight spot.

Overall, a weakened fiat currency tends to be positive news for Bitcoin and other digital assets so all eyes are on what the Fed will do.

CoinDesk reports:

The Fed will announce its latest interest rate decision on Wednesday at 2 p.m. ET (18:00 UTC). Half an hour later, Powell will speak at the post-meeting press conference.

The CME FedWatch tool shows traders expect the central bank to raise rates one final time by 25 basis points to the 5%-5.25% range, ending the so-called tightening cycle that roiled cryptocurrencies last year.

Further, traders are pricing rate cuts starting in July.

Dovish expectations have strengthened as multiple uncertainties have recently risen in the form of the debt ceiling, recession fears, crisis at regional banks and bearish speculative fervor in banking stocks.

The aggressive pricing of pause and rate cuts means Powell needs to confirm the same during his presser, or else the Treasury yields and the U.S. dollar (USD) may bounce. An uptick in yields and the dollar has historically been bearish for bitcoin.

Regardless of what the Fed does, some say that the market has already priced in a rate hike continuation so it may not make a huge difference.

However, if it turns out that the Fed will pause the rate hikes due to fears of more banks failing, this could surprise the markets.

Based on market data, the expectation right now is that the central bank will raise the policy rate by around 25 basis points.

Anything more than that could turn the sentiment to be negative for the price of Bitcoin and make it hard for the asset to achieve $30k again.

FXStreet concludes:

Experts at TD Securities expect the central bank to emphasize that “disinflation is evolving slower than expected” and leave room for additional monetary policy tightening measures in the FOMC conference.

The likelihood of additional rate hikes in 2023 could negatively impact the sentiment of risk asset traders.
RodMartin, a crypto expert and trader believes BTC price is likely to see a bounce.

Based on the expert’s analysis, BTC price could see a bounce at the range’s volume Point of Control (POC) at $28,000 and plot a return to $29,000.

Experts are awaiting a bounce in BTC price, however the key macro events of the week are likely to influence the asset’s price this week.

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