Bitcoin Back Above $29,000 Post-Fed as Markets Bet on Rate Cuts – Where Next for the BTC Price?
Bitcoin has recovered back above the $29,000 level, rising above its 21 and 50-Day Moving Averages in doing so, in wake of another rate hike from the US Federal Reserve.
The US central bank lifted the federal funds target range by 25 bps on Wednesday to 5.0-5.25%, marking 500 bps worth of rate hikes in its last ten meetings.
Prior to the rate announcement, many market participants had been betting that this would likely be the last hike from the Fed this tightening cycle, given 1) recent progress on bringing inflation back under control and 2) recent troubles amongst regional US banks, partially caused by tighter financial conditions.
And the Fed did nothing to push back against this narrative, with a reference to the appropriateness of further tightening dropped from the central bank’s policy statement.
As a result, markets are now extending bets that the Fed will begin an interest rate cutting cycle in the second half of 2023 and this could be boosting Bitcoin, which was last up around 1.5% on the day, and more than 3.0% up versus earlier session lows in the low-$28,000s.
According to the CME’s Fed Watch Tool, the probability that the Fed will have cut rates to 4.25-4.5% or below (i.e. at least 75 bps worth of cuts) by December increased ever so slightly on Wednesday to a little over 60%.
Despite the 3.0% intra-day swing, liquidations of leveraged Bitcoin futures positions remained fairly subdued at only around $34 million, according to data presented by crypto derivatives analytics website coinglass.
Low liquidations suggest that the Fed meeting hasn’t caused too much of a stir in the Bitcoin market, as indicated by the fact that prices still remain well within the recent multi-week $27,000-$31,000ish range and a host of
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