"Waiting for Powell's speech." What will happen to bitcoin after the Fed meeting
Experts told how bitcoin price may behave after the change in the interest rate of the U.S. Central Bank
Two weeks ago, it was expected that the U.S. Federal Reserve (Fed) might raise interest rates by 50 bps. However, after that, there was a series of collapses of American banks, the largest of which was Silicon Valley Bank (SVB), and now the situation looks different.
Cryptocurrency market participants, as well as all other markets, are waiting for the Fed's decision and its consequences for the price of crypto assets. As of 16:00 Moscow time, bitcoin is trading at $28,200, and the market capitalization of the first cryptocurrency is $545.9 billion. Analysts polled by RBC Crypto told how the price may behave after the Fed meeting. The Fed's decision will be announced at 21:00 Moscow time.
"The situation has changed dramatically."
Head of the analytical department of AMarkets
Now the Fed rates are 4,5-4,75% and it will be quite expected if the regulator raises the rate for another 0,25%. At least that was announced despite the banking crisis in the U.S., as the inflation rate (6% at the moment) is still far from the target.
Bitcoin over the years has shown an inverse dependence on the Fed's rate: when the rate goes down, the value of the coin grows and the capitalization of bitcoin and other cryptocurrencies increases. When the rate went up, the opposite happened: bitcoin fell (we saw this during the last year).
But now the situation has drastically changed: bitcoin went up against the backdrop of the banking crisis in the U.S., despite the prospect of another rate hike. This probably happened because investors began to save their money by taking it out of the banking system and investing in digital assets (in the same way gold, the main defensive asset, went up).
It is obvious that raising the rate will further exacerbate the difficult situation in the U.S. banking system, where another 40 credit institutions (according to one source) or 200 banks (according to other experts and economists) are at risk of bankruptcy. This means that the flight of capital into precious metals and bitcoin may continue. In this scenario, bitcoin may cross the $30-thousand mark as soon as tomorrow or the day after tomorrow.
"Waiting for Powell's speech."
BitRiver Financial Analyst
Now all attention is directed to the results of the US Federal Reserve meeting. Market participants are eager to find out whether the regulator will raise rates or take a break.
Bitcoin could test the $29,000 level before the regulator's decision is announced. Then, the dynamics will depend on the Fed's decision and Powell's speech.
Bitcoin actually reacts not to rate changes but to the dynamics of the dollar and the S&P 500 index. A weakening dollar and rising index push its price up. A rally in the dollar and a drop in the index, respectively, push the price down.
Bitcoin has opened a way to the area of $33-34 thousand. If the U.S. Federal Reserve meeting will not be followed by a sharp correction, then after a brief consolidation (about two weeks), you can wait for the strengthening of bitcoin to $34 thousand. We're waiting for Powell's speech.
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