Bitcoin (BTC) wobbled near $40,000 as investors awaited the U.S. Fed to release its new economic projections this Wednesday.
The market’s focus moved to two vital questions: Will U.S. fed show their plans to increase interest rates in 2023? And by how much do they believe inflation will grow this year and next year?
The Fed did defend the inflationary spike by stating that they are “transitory.” The central bank has said it will wait until it witnesses inflation holding near higher levels before proceeding with rate cuts.
This rate increase projection gives the cryptocurrency at least two years to keep its anti-inflation growth.
The top cryptocurrency seems to be the top asset after the March 2020 crash, caused by fears about quantitative easing and trillions of stimulus lowering the desire for the U.S. dollar.
Nick Spanos, the founder of the Bitcoin Center in New York City, noted that increasing inflation combined with the Fed’s drive to hold interest rates close to the 0.25% level gives Bitcoin lots of room to keep its bull run going.
“After the Fed Dot Plot today, I can see a reaction in the crypto world with an increase in the value of Bitcoin. Based on this retesting of the $45,000 marker seems more likely, in the near future.”
Death cross looms
However, some technical hints on Bitcoin’s charts don’t go along with this bullish outlook.
For example, the BTC/USD exchange rate recently showed greater selling pressure within the $40,000–$42,000 area. Because of this, traders nervously treat that area as their cue to cash in on their profits, thereby risking lowers toward the next support point between $35,000 and $30,000.
Meanwhile, Bitcoin’s 50-day moving average is showing it could close under its 200-day simple moving average. This crossover is labeled a “death cross,” an indicator that predicts price declines within markets.
“Whenever a Death Cross happens, Bitcoin sees a deeper downside., said Rekt Capital, a market analyst. “In 2014, the Death Cross happened before a -71% fall. In 2017, a -65% fall. And in 2019, a -55% fall.”
Author: Blake Ambrose