Bitcoin’s price suffered a sharp decline to a three-week low of $66,170. Let’s dig in and explore how the upcoming Federal Reserve FOMC meeting could impact the Bitcoin market.
Tuesday was a disaster for crypto. Bitcoin price plummeted to $66,000 from $70,000, and now traders are holding their breath for Wednesday’s CPI inflation report and Federal Open Market Committee (FOMC) move.
As inflation dips and economic signals weaken, some forecast the FOMC will see rate cuts, while others say this crypto dump was artificial and we’ll pump like crazy this week.
Is this true? Are we going to recover back to $70k tomorrow?
Assessing the Pre-FOMC Damage: Altcoins Hit Hard Before FOMC
With the FOMC looming, altcoins tanked even harder than Bitcoin. Ethereum sank below $3,500, and other big names like Solana, Dogecoin, Cardano, and Chainlink fell between 6% and 9%.
CoinGlass data showed $250 million in leveraged liquidations following last Friday’s $400 million purge.
(Source)
So, what are the odds that we will see rate cuts from the Fed? 99Bitcoin’s analysts believe it is not likely.
Powell has said on numerous occasions that rate won’t fall until people lose jobs. Jobs numbers are reporting higher now that everyone is forced into holding multiple jobs, which means no rate cuts for you.
Moreover, you have to take into account that US rates are way higher than those of other countries. This leaves the FED more wiggle room to lower rates while still having higher rates than Europe and Canada.
There’s a chance the Fed might not lower until something breaks.
There is Hope From the FOMC: Could This Trigger Strong Q3?
One major reason behind the pullback is investors “de-risking” ahead of the May Consumer Price Index (CPI) report and the Federal Reserve meeting, as noted by crypto analysts k33.
“The stage is set for a frantic macro-Wednesday, with both May CPI data and the Fed’s interest rate decision poised to move the market,” K33 analysts said.
The one bit of hope is that people were calling for another delay on spot eth ETFs, and the Securities and Exchange Commission suddenly changed their minds.
While the Fed and SEC are separate entities, this shows that the betting market is worthless.
The markets also thought we were gonna have cuts in May. It’s all guessing in the end.
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The Bottom Line: Is a Bull Run on the Horizon For Bitcoin Price?
If bullish momentum does return this week, based on current technical analysis, Bitcoin could be poised for a breakout rally. According to trend-based Fibonacci levels, BTC’s price could target $81,873 in a new bull run.
However, the upcoming FOMC meeting remains a double-edged sword for Bitcoin. Given the limited chances of a rate cut due to robust jobs data, we might continue to crab for another month.
One last bit of food for thought: The next FED reunion will not be until the last week of July and they don’t meet in August. This could give them an incentive to cut now.
But like we said, it’s all guessing in the end.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
