Bitcoin (BTC) Rally Pauses Ahead of Fed Chair Jerome Powell’s Speech
The world’s largest cryptocurrency Bitcoin had a phenomenal start to the year 2023 with the BTC price gaining more than 40% so far. Last week, Bitcoin surged past $23,000 levels, however, couldn’t sustain above it for long.
Over the last weekend, Bitcoin has been facing a bit of selling pressure and is currently trading 2.16% down at a price of $22,886. The recent pause in the Bitcoin price rally comes just ahead of the speech by Fed Chairman Jerome Powell, on Tuesday, February 7.
Although the Fed has hinted at slowing the pace of interest rate hikes, any pivot from this the rate hikes looks a distant possibility. The strong US jobs data has poured water on the expectations that the Fed’s monetary tightening policy could end soon.
Any dovish stand by the Fed Chairman this Tuesday could flip the momentum to bearish ending the party for crypto and stocks. After a strong start to the year, some market analysts have cautioned investors for fresh entry into Bitcoin at the current stage.
Analysts are waiting for the Fed commentary but believe that the possibility of a soft landing looks from as of now. If US slips into a full blown recession, this will be the first litmus test for Bitcoin and the entire crypto space.
Mike McGlone, the senior macro strategist at Bloomberg Intelligence recently shared what could happen to BTC price in the case of a recession. While it’s difficult to predict the extent of the fall, McGlone compared Bitcoin with the Nasdaq 100 index since the two have shown greater correlation in the past. During the last two recessions of 2002 and 2009, the Nasdaq 100 index tanked 70% and 40% respectively. We can expect the BTC price to tank in the similar range if recessions strikes this year.
But knowing the fact that Bitcoin falls among the risk-ON assets, it likely to exhibit greater volatility and correct along with the US equity markets. On the downside, a potential test range for Bitcoin is $20,000 and $21,000.
Ahead this month on February 14, the US will also release the outcome of Consumer Price Index (CPI) data for January. Even if it shows that inflation is slowing lesser than expected, it will lead to US dollar gaining strength while affecting he equity and crypto markets.
But some market analysts also believe that the Bitcoin won’t fall much going ahead. Currently there’s a mixed bag of belief among market crypto market analysts pertaining to BTC and the overall crypto space.
On the technical chart, the BTC price has formed a bullish pattern. Currently, Bitcoin is on the cusp of a golden cross, where the 50-day average price tops the 200-day.