Big Week Ahead For Bitcoin And Crypto: This Will Be Key
Due to the insolvency of several US banks and the ongoing liquidity problems of reportedly over 186 US banks, as well as UBS Bank’s acquisition of Credit Suisse, Bitcoin and cryptocurrencies are more bullish than ever. On Sunday, Bitcoin price peaked at over $28,400.
Some 15 years after the bankruptcy of the great American bank Lehman Brothers and the Great Financial Crisis, Satoshi Nakamoto’s vision is becoming more and more a reality. As the US banking system faces another major crisis and bailouts, investors are fleeing to Bitcoin.
This is literally what was written in the genesis #Bitcoin block.
It was designed for this environment. pic.twitter.com/xiTV4Cx0jC
— _Checkɱate 🔑⚡🌋☢️🛢️ (@_Checkmatey_) March 17, 2023
However, investors in the Bitcoin and crypto space should continue to keep an eye on this week’s economic and financial data. The ultimate event will be the FOMC meeting and the US Federal Reserve Bank (Fed) interest rate decision. In addition to the monetary policy decision, the Fed will also publish its updated forecasts.
Additionally, there are smaller data points coming this week which are likely to have little direct impact on the Bitcoin price. On Tuesday, US existing home sales figures for the month of February will be released. On Thursday, current US new home sales numbers will follow.
Closing out the week on Friday will be the latest US durable goods orders for the month of February. However, none of this data will be as important as the Fed’s decisions.
Bitcoin and Cryptocurrency Investors Need to Watch the Fed
On Wednesday, the Fed will announce its interest rate decision at 2 pm EST. At the subsequent press conference at 2:30 pm EST, traders will closely follow statements the Fed Chair will make on future monetary policy.
The FOMC meeting will supposedly be the most important of the year, as the Fed will publish the dot plot, which summarizes the FOMC projections for the long-term federal funds rate, for the first time in a long time and especially since the crisis began. A projected pivot as early as this year would be extremely bullish for Bitcoin.
According to the CME FedWatch tool, only a small majority of 53% of analysts still expect a 25 basis point hike in rates in March. An incredible 47% even expect a break.
On March 7, Powell testified before the Senate Banking Committee that the Fed would likely have to raise rates “more than previously expected” in response to persistent inflation. The vast majority of analysts expected a 50 basis point increase in rates.
However, in light of the banking crisis, the prediction has completely reversed. Fed Chair Powell has come under a lot of flak over the troubles in the banking sector, as his historically fast pace of interest rate hikes has led to problems in the banking sector. Many market participants are calling for a change in their hawkish monetary policy.
Further rate hikes carry the inherent risk that more banks will fail. It’s also why Goldman Sachs was the first major bank to predict it doesn’t expect a rate hike in March, given the stress in the banking sector. Deutsche Bank and Barclays have since echoed that prediction.
“In light of the recent stress on the banking system, we no longer expect the FOMC to deliver a rate hike at its March 22 meeting with considerable uncertainty about the path beyond March,” Goldman Sachs said. stated.
For Bitcoin, a pause in rate hikes and even an increase of just 25 basis points should reinforce bullish momentum in the market, although much will also depend on Powell’s assessment of the current situation at the FOMC press conference.
Experts will also be paying close attention to Powell’s comments on the Bank Term Funding Program (BTFP) and new swap lines with five other major global central banks for possible hints on a change in fiscal policy posture needed in the near term. Either way, Bitcoin investors should expect a volatile Wednesday.
At press time, Bitcoin price was trading at $28,107, looking extremely bullish. As the 1-hour chart shows, the hourly uptrend is still intact.
Featured Image from iStock, chart from TradingView.com