Bitcoin Climbs Above $28,500, Will Fed Decision Fuel Rally?
Bitcoin price continues to record new annual highs as the cryptocurrency goes on a bullish rampage. There is no level of resistance capable of containing BTC bulls, while macroeconomic uncertainty and a banking crisis fuel the fire.
At the time of writing, Bitcoin is trading above the critical $28,500 level and is pushing higher. Today’s US Federal Reserve (Fed) Open Market Committee (FOMC) is bound to bring volatility. The ongoing crisis in the country has investors sitting on edge, and this event could bring clarity to BTC and other assets.
Bitcoin investor sentiment shifted, but caution prevails
According to crypto market analyst firm Blofin, the price of Bitcoin is rises while traders wait The FOMC decision on interest rates. As NewsBTC reported yesterday, any sweet rate hike could hurt the current BTC rally.
If the Fed cuts, the institution sends a message that can be interpreted as fear. If it raises interest rates, the market can translate this into confidence. Both results seem negative for the financial institution, as the former can increase the crisis, while the latter can increase inflation.
In that sense, the Fed should operate under “Business as usual” and raise interest rates by 25 basis points (bps). If so, the market may calm down and BTC may regain higher levels. Meanwhile, the number one crypto by market capitalization is bound to dominate other digital assets. Blofin wrote:
BTC is now trading above $28.5k amid the uncertainty surrounding the FOMC rate decision. Due to the improvement in risk asset sentiment, BTC is significantly outperforming ETH at the moment, which is reflected in the ETH/BTC trading pair.
Blofin notes a decline in implied volatility for at-the-money (ATM) contracts in the crypto options sector. In other words, investors expect BTC’s rally to slow down sometime in the coming days.
In this sector, crypto investors show a neutral bullish bias, but Blofin noted, “risk aversion is also increasing.” Today’s FOMC decision could have a long-lasting impact on these investors’ perceptions.
However, there is a high chance that the Fed will stay the course or go dovish to quell fears in the market. As long as this stance does not translate into a rate cut, BTC is likely to trend upwards in the short term.
4/6. From a bias perspective, given that the Federal Reserve is likely to display a dovish stance at the March FOMC meeting, most investors still maintain a neutral to bullish stance. pic.twitter.com/SH7s5vIW9h
— Blofin Academy (@Blofin_Academy) March 22, 2023
BTC/USDT chart from Transingview
