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Bitcoin’s price is under pressure, with BTC inching closer to $60,000. This week, the crypto market’s focus is on the Federal Reserve ahead of a highly anticipated FOMC meeting and awaited comments from Chairman Powell—let’s dig in.
All hopes of Bitcoin racing one way to $100,000 have all but fizzled. Price action is drab (at least for the perma-bulls), with Bitcoin moving lower, exciting sellers. BTC Bears are unrelenting and targeting a Bitcoin price at $60,000 – going by the pace of sell-off over the past five trading days or so.
(BTCUSDT)
Digging into FOMC and Powell: Will Federal Reserve Rescue Bitcoin Price?
Events this week could take an interesting turn. Last week’s bullish TSLA earnings call fuelled a shift to risk-on sentiment, sparking demand for the world’s most valuable coin. Alongside the upcoming FOMC, all eyes in the market are on Jerome Powell, the chair of the United States Federal Reserve.
In early 2020, the Fed changed its monetary policy to fiscal stimulus, pumping prices across the market, with Bitcoin pushing up to $70,000 by November 2021.
But now, in face of persistent CPI and geopolitical pressures in the Middle East, the crypto market is now jittery as investors anxiously await the Federal Open Market Committee (FOMC) interest-rate decision on May 1.
If anything, the Fed’s decision on interest rates (especially if they decide to slash rates from 5.50%) would profoundly impact Bitcoin price and the broader crypto scene – adding further fuel to risk-on sentiment in the market.
This could boost Bitcoin ETF inflows – which have consistently outperformed bond ETFs so far in 2024.
Analyst expectations for the FOMC meeting vary, but the Bitcoin market broadly anticipates that the Federal Reserve will continue keeping interest rates steady. Interest rate statement aside, volatility is expected 45 minutes later.
At this point, traders will be particularly interested in Jerome Powell’s press conference, which, as in the past, could offer crucial insights into the central bank’s monetary policy direction in the near term.
The Federal Reserve’s position – as expressed in Powell’s tone – is critical, especially after recent economic data.
Last week, data showed that real GDP grew +1.6% in Q1 2024, almost -50% slower than the +3.4% registered in Q1 2023.
Notably, advance GDP fell much lower than economist’s forecast of +2.5% – suggesting slowed growth in the United States.
This unexpected slowdown in GDP growth and rising inflation have fueled concerns about a delay in the Federal Reserve’s expected rate cuts, negatively impacting crypto sentiment.
Inflation data in March showed that price pressures in the United States rose +2.7%, pushing the annualized headline inflation to +3.4%, way above the Fed’s ideal +2% level.
At the same time, the United States labor market has been robust, with more job openings than available workers.
Analysts now say a combination of weak GDP growth and rising price pressures might see Powell keep interest rates higher for longer than expected, or, even consider raising them to curb inflation.
What Does This Mean For Bitcoin Price? Increasing Outflows From Spot BTC ETF Issuers
If the Federal Reserve decides to raise rates, as they did in 2022, it’s likely that Bitcoin prices, even after Halving, could decline.
This situation is exacerbated by the recent increase in spot Bitcoin outflows, indicating investor unease.
Lookonchain data on April 26 shows that GBTC and the other nine spot Bitcoin ETFs, including BlackRock and Fidelity, decreased over 5,000 BTC worth over $320 million.
Apr 26 Update:#Grayscale decreased 2,051 $BTC(-$130.66M) and currently holds 300,613 $BTC($19.15B).
9 ETFs(Including #Grayscale) decreased 2,987 $BTC(-$190.26M).#Blackrock has not added $BTC for 2 consecutive days.https://t.co/Hkh1L7eYBF pic.twitter.com/Y56Ur0ZWpS
— Lookonchain (@lookonchain) April 26, 2024
If outflows persist, Bitcoin price will likely collapse below $60,000, spooking the market and forcing an altcoin dump – a potential golden opportunity.
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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.
