Bitcoin and the crypto market are up today. Why?

Bitcoin and the crypto market are up today. Why?

The Blockchain Industry: A Glimpse into the Market’s Movements

The Bitcoin and crypto markets have experienced a slight upswing recently, with BTC and other major altcoins making gains. This upward trend can be attributed to various factors, with one significant catalyst being the Federal Open Market Committee (FOMC) meeting held recently.

At the time of writing, Bitcoin’s price has increased by 0.8% in the last 24 hours, currently trading at $29,486. Despite facing resistance around the critical resistance area of $29,750, BTC has shown resilience and is attempting to reclaim its upward trajectory. Furthermore, other major cryptocurrencies such as Ethereum (+1.0%), XRP (+1.4%), Cardano (+3%), and Solana (+7%) are also experiencing gains.

Bitcoin Follows TradFi’s Reaction

The FOMC meeting has become a focal point for the crypto market’s movements, primarily due to the Federal Reserve Chairman Jerome Powell’s remarks and the reaction of traditional financial markets. Powell reiterated that the central bank remains data-dependent, indicating that further interest rate hikes are not ruled out, although no decision on the matter has been reached yet.

Powell emphasized that core inflation (both PCE, CPI) remains the primary focus, and the Fed will stop raising rates well before the inflation target of 2% is reached. However, he dampened hopes by stating that he does not expect inflation to fall below 2% before 2025. This statement initially triggered a dip in Bitcoin’s price, but it quickly rebounded, seemingly following the trajectory of traditional financial markets.

Interestingly, the Dow Jones rose for a 13th consecutive day after the FOMC meeting, signaling investors’ confidence in a bullish market sentiment. Various experts and analysts in the cryptocurrency space have offered diverse opinions on the implications of the FOMC meeting and Powell’s remarks.

Jim Bianco, an influential figure in the financial industry and founder of Bianco Research LLC, highlighted the lack of clarity in the Fed’s communication, stating, “It is provided the LEAST amount of information of any meeting since they started hiking in March 2022. Powell is going out of his way to say nothing and not commit to anything. So, this meeting has become a Rorschach test. Everyone sees into it what they want.”

This sentiment seems to resonate with both traditional finance and crypto markets. The big question arises: how long will the Fed hold rates up, and how long before it pivots? Since this is data-dependent, no one knows for certain, but market expectations and the Fed’s projections still seem far apart. The CME’s FedWatch tool currently predicts a slight majority in favor of a first rate cut already in March 2024. However, Powell made it clear in a hawkish tone that the key rate must remain high for an extended period to allow its impact on the economy.

Charles Edwards, founder of Capriole Investments, noted the unprecedented tightness in current economic conditions due to the combination of money supply growth and negative interest rates. He suggested that historical trends indicate a strong possibility of a one-way bull market emerging under these conditions, stating, “Powell has overtaken Volcker as the tightest Fed chair ever. Economic conditions have never been tighter than today, […]. In all prior instances, inflation was well under control, the stock market was higher 12 months later, and a major one-way bull market trend emerged.”

Crypto analyst Michael van de Poppe expressed concern about the Fed’s projection that a recession is not on the horizon. He speculated, “Most likely no more rate hikes. […] Have a terrible GDP today and sweep the lows on Bitcoin before we continue the party up. Buy the dip season.”

While the implications of the FOMC meeting and Powell’s remarks have generated a range of interpretations, the crypto market continues to closely monitor and react to these developments. As of now, Bitcoin’s price is gradually approaching the red resistance area below $29,800.

Bitcoin price slowly grinding up, 1-hour chart

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