Bitcoin rose on the publication of US macroeconomic data. What will happen to the market next

Experts from "Software for Bro" have outlined targets for cryptocurrency prices following the publication of US macroeconomic data. They commented on the crypto market's reaction to the US macroeconomic data and forecasted the further movement of Bitcoin and other crypto assets.

On December 14, the price of Bitcoin (BTC) recovered after several days of correction, reaching $43,465 on the Binance exchange paired with the Tether USD (USDT) stablecoin. The price of the leading cryptocurrency stabilized at around $43,000.

The first upward momentum occurred around 22:00 NY time on December 13 when the US Federal Reserve announced its decision to keep the interest rate unchanged. The total market capitalization of the crypto market increased to $1.54 trillion. Cryptocurrencies from the top 10 by market capitalization generally followed Bitcoin's growth dynamics.

BTC/USD
42,328 -494 (-1.15%)

Federal Reserve Chair Jerome Powell, during a press conference following the meeting, deemed further rate hikes unlikely and mentioned discussions among officials about when they can begin reducing it. Powell pointed to significant progress in combating inflation, stating that "inflation has come down from its highs, and this has happened without a significant increase in unemployment. This is very good news," according to the head of the Federal Reserve.

However, Powell reiterated the Federal Reserve's readiness to further tighten monetary policy if necessary. He clarified that inflation still remains too high, and it will take some time to return it to the target of 2%. Powell emphasized that there is no guarantee of continued success in this matter.

The Fed's rate remained on pause. What will happen to the economy and oil prices?

The rise in the price of Bitcoin began with the opening of the European session, intensified during the American session, and accelerated after the US Federal Reserve meeting and the decline of the US dollar commented financial analyst Vladislav Antonov from BitRiver.

"The Fed's decision was not a surprise: the rate was left in the range of 5.25–5.50%. The US Dollar Index (DXY) fell to 102.74 points. The weakening of the currency is because the regulator predicts three rate cuts in 2024 by 75 basis points, which is higher than previous forecasts. Inflation expectations have been lowered to 2.4% in 2024 with a return to the target of 2% by 2026," summarized the analyst.

After returning to the $43,000 level, Bitcoin recovered 75% of the decline on December 11, but "this is not the end yet," according to Antonov. The US Federal Reserve meeting has concluded, and the external background for the cryptocurrency market remains favorable.

"Now nothing holds buyers back from taking the $45,000 level and continuing the rally to $50,000 in anticipation of approval for Bitcoin ETF applications," he predicts, adding that, in his estimation, the bullish phase will last until January 8.

The significance of a spot Bitcoin ETF

Various ETFs, including those on gold, manage assets totaling trillions of dollars. In the cryptocurrency community, it is believed that even a small percentage of this capital can potentially impact the global crypto market. If spot Bitcoin ETFs are approved, demand for the cryptocurrency will increase: buying ETF shares implies the delivery of Bitcoin as the underlying asset, meaning its direct purchase on the market, affecting the price.

What is a Bitcoin ETF? How it works and its impact on the cryptocurrency market

The rise in cryptocurrencies over the past day is due to the market's reaction to the Federal Reserve meeting and Jerome Powell's press conference, agrees cryptocurrency market analyst. The main signal investors received is that the Federal Reserve is satisfied with the pace of inflation reduction, and, most likely, there will be no need to raise the rate further. At the moment, the market assesses the probability of the start of rate cuts as early as March at 70%, and the average consensus forecast of analysts suggests a significant easing of monetary policy from the summer of next year.

In connection with this, risky assets, particularly cryptocurrency, have received substantial support. The rise in the crypto market is also occurring against the backdrop of an increase in the number of wallets of major market participants, observed over the past few days, adds the expert. The market capitalization is stable, and there is a chance of the continued strengthening of the most capitalized assets and altcoins until the end of the year.

Investment idea: betting on the capitalization growth of altcoins

"At the moment, investors are shifting from Bitcoin and Ethereum, which have brought substantial profits over the past couple of months, to less capitalized coins. Such a flow of funds positively affects altcoins from the top 30 by capitalization, which may show growth until the end of the year due to the influx of new buyers,"

The current fundamental situation does not yet increase liquidity, as the monetary policy remains tight. However, with the approach of deadlines for the approval of spot ETFs (end of January — February 2024), both the market and individual assets may appreciate, according to the expert.