Bitcoin (BTC/GBP) outlook as BOE rate hikes peak
Bitcoin price continued to consolidate as investors focused on rising short-term bond yields. The BTC/GBP pair was trading at 19,541 on Thursday morning, a few points lower than last month’s high of 21,000. During the same period, the BTC/USD pair was teetering on the 23,000 level. ETH/GBP is at 1400, down from last month’s high of 1450.
British bond yields rise
The BTC to GBP price was in a tight range as investors focused on the bond market. Bond yields have risen significantly in recent months. In the US, the 10-year Treasury yield has moved close to 4%, the highest point since last year. Furthermore, 2-year government bonds have moved close to 5%, which means that the yield curve is highly inverted.
The situation is better in the UK, where the two-year bond yield is at 3.6% while the 10-year yield has moved to 3.8%. Still, those yields are at their highest level in months. The main reason for their high pricing is the fact that central banks have maintained their hawkish tones.
On Wednesday, the Bank of England (BoE) governor said the bank was approaching the hiking cycle. Nevertheless, he warned that the bank will not hesitate to tighten the screws in an attempt to push inflation to its two-year target.
The Bitcoin price tends to underperform during periods of high interest rates, as we experienced in 2022. With bond yields rising, especially in the US, that means people can achieve 5% returns risk-free. Although this return is negligible, it is significantly high for large institutional investors.
March will be an important month for BTC as the Federal Reserve, European Central Bank (ECB) and Bank of England (BoE) will have a meeting. Analysts expect these banks to maintain their rate hikes as inflation remains at a high level.
BTC/GBP Forecast
BTC/GBP chart by TradingView
The 4H chart shows that the BTC/GBP price has been in a consolidation phase for the past few days. During this period, it hovers slightly below the resistance level of 20,000. The 25-day and 50-day moving averages are also traded. A look at oscillators shows that the MACD and signal line have formed a bullish divergence while the Relative Strength Index (RSI) has moved slightly below the neutral point at 50.
Therefore, the BTC to GBP price is likely to remain in this range and then have a bearish breakout as sellers target the rising trend line shown in black at 18,000. A move above 20,500 will invalidate the bearish view.
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