Bitcoin Holds Steady Above $23K As Traders Eye Fed’s Next Meeting
Bitcoin (BTC) held above $23,000 on Friday as traders awaited next week’s decision on interest rates and any hints from politicians about when their hiking campaign might end.
The largest cryptocurrency by market capitalization recently changed hands at around $23,100, up 0.1% for the day.
It’s been a roaring start to 2023 for bitcoin, which has risen in price by more than 40% since New Year’s Eve. BTC passed $23,000 for the first time since mid-2022 about a week ago and has managed to stay in that territory.
“Bitcoin should continue to consolidate ahead of the Federal Open Market Committee (FOMC) decision, with downside risks if the Fed sticks to its hawkish mantra,” Edward Moya, senior market analyst at foreign exchange Oanda, wrote in a Friday note on the Federal Reserve’s rate-setting unit .
Traditional markets were also up slightly, with the S&P 500 up about 0.3%.
The crypto rally came after the latest Personal Consumption Expenditure (PCE) report showed a slowdown in inflation at the end of last year – a target the Fed has been targeting with interest rate hikes. The CME FedWatch tool currently shows that traders see about a 99% chance that the FOMC will raise interest rates by 25 basis points (0.25 percentage points) at its February meeting.
With the recent broader market rally, top crypto assets such as bitcoin and ether (ETH) have topped stocks this year: ETH is up approx. 32%, while the CoinDesk Market Index is up 39%. By comparison, the S&P 500 and the Nasdaq Composite index were up 6% and 10% respectively.
Joel Kruger, market strategist at crypto exchange LMAX Digital, said that from a technical point of view, the price of BTC is currently overbought, as seen by the daily Relative Strength Index (RSI) which measures the magnitude of recent price changes.
According to data from TradingView, the RSI indicator showed a level of 81.9 on Friday. (Readings above 70 suggest an asset is overbought.)
Kruger told CoinDesk that BTC’s next key resistance to see comes in around $25,200 based on the August peak. He would not rule out “the possibility of seeing BTC go down $10,000 in the first half of the year” or seeing the rally “above $50,000 in the second half of the year.”
“There’s a lot of room to go both ways,” he said. “I just wonder if there’s a shoe to drop before we finally see the next big push.”
Data obtained by Coinglass shows that funding rates for BTC are currently around 0.01% as of Friday, a signal that market sentiment is positive among traders, but “still far from the 0.06% levels recorded in February or November 2021 when traders were paying 80% more annually to long bitcoin,” according to Lucas Outumuro, head of research at crypto data and analytics firm IntoTheBlock, in a Friday newsletter.
Outumuro wrote that “the current levels in derivatives suggest that the market is optimistic, but at the same time not overheated yet, which could create a basis for the ongoing rally to persist.”
